Tenaris SA Annual Report 2013

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FY2013 Annual Report · Tenaris SA

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Annual Report
2013

Certain defined terms

Cautionary statement concerning

Unless otherwise specified or if the context so requires:

forward-looking statements

This annual report and any other oral or written statements made by

•

References in this annual report to “the Company” refer exclusively

us to the public may contain “forward-looking statements”. Forward

to Tenaris S.A., a Luxembourg public limited liability company (société

looking statements are based on management’s current views and

anonyme).

assumptions and involve known and unknown risks that could cause

•

References in this annual report to “Tenaris”, “we”, “us” or “our”

actual results, performance or events to differ materially from those

refer to Tenaris S.A. and its consolidated subsidiaries. See Accounting

expressed or implied by those statements.

Policies A, B and L to our audited consolidated financial statements

included in this annual report.

We use words such as “aim”, “will likely result”, “will continue”,

•

References in this annual report to “San Faustin” refer to San Faustin S.A.,

“contemplate”, “seek to”, “future”, “objective”, “goal”, “should”,

a Luxembourg public limited liability company (société anonyme) and the

“will pursue”, “anticipate”, “estimate”, “expect”, “project”, “intend”,

Company’s controlling shareholder.

“plan”, “believe” and words and terms of similar substance to

•

“Shares” refers to ordinary shares, par value $1.00, of the Company.

identify forward-looking statements, but they are not the only way

“ADSs” refers to the American Depositary Shares, which are evidenced

we identify such statements. This annual report contains forward-

by American Depositary Receipts, and represent two Shares each.

looking statements, including with respect to certain of our plans and

•

“tons” refers to metric tons; one metric ton is equal to 1,000

current goals and expectations relating to Tenaris’s future financial

kilograms, 2,204.62 pounds, or 1.102 U.S. (short) tons.

condition and performance. Sections of this annual report that by

•

“billion”” refers to one thousand million, or 1,000,000,000.

their nature contain forward-looking statements include, but are not

“U.S. dollars”, “US$”, “USD” or “$” each refers to the United States dollar.

limited to, “Business Overview”, “Principal Risks and Uncertainties”,

and “Operating and Financial Review and Prospects”. In addition

to the risks related to our business discussed under “Principal Risks

Presentation of certain financial and other information

and Uncertainties”, other factors could cause actual results to differ

materially from those described in the forward-looking statements.

ACCOUNTING PRINCIPLES

These factors include, but are not limited to:

We prepare our consolidated financial statements in conformity

with International Financial Reporting Standards, as issued by the

•

our ability to implement our business strategy or to grow through

International Accounting Standards Board, or IFRS, and adopted by the

acquisitions, joint ventures and other investments;

European Union, or E.U.

•

the competitive environment and our ability to price our products

and services in accordance with our strategy;

We publish consolidated financial statements expressed in U.S. dollars.

•

trends in the levels of investment in oil and gas exploration and

Our consolidated financial statements included in this annual report

drilling worldwide;

are those as of December 31, 2013 and 2012, and for the years ended

•

general macroeconomic and political conditions in the countries in

December 31, 2013, 2012 and 2011.

which we operate or distribute pipes; and

•

our ability to absorb cost increases and to secure supplies of essential

ROUNDING

raw materials and energy.

Certain monetary amounts, percentages and other figures included

in this annual report have been subject to rounding adjustments.

By their nature, certain disclosures relating to these and other risks are

Accordingly, figures shown as totals in certain tables may not be the

only estimates and could be materially different from what actually

arithmetic aggregation of the figures that precede them, and figures

occurs in the future. As a result, actual future gains or losses that may

expressed as percentages in the text may not total 100% or, as

affect our financial condition and results of operations could differ

applicable, when aggregated may not be the arithmetic aggregation

materially from those that have been estimated. You should not place

of the percentages that precede them.

undue reliance on the forward-looking statements, which speak only as

of the date of this annual report. Except as required by law, we are not

under any obligation, and expressly disclaim any obligation, to update

or alter any forward-looking statements, whether as a result of new

information, future events or otherwise.

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Index

05.

Leading indicators

06.

Letter from the Chairman

08.

Company profile

09.

Management report

09.

Information on Tenaris

09.

10.

13.

14.

16.

19.

35.

40.

41.

42.

43.

The Company

Overview

History and Development of Tenaris

Business Overview

Research and Development

Tenaris in numbers

Principal Risks and Uncertainties

Operating and Financial Review and Prospects

Quantitative and Qualitative Disclosure

about Market Risk

Recent Developments

Environmental Regulation

Related Party Transactions

Employees

Corporate Governance

61.

Management certification

Financial information

63.

Consolidated Financial Statements

151.

Tenaris S.A. Annual accounts

(Luxembourg GAAP)

164.

Investor information

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Leading indicators

TUBES SALES VOLUMES (thousands of tons)

Seamless

Welded

Total

TUBES PRODUCTION VOLUMES (thousands of tons)

Seamless

Welded

Total

FINANCIAL INDICATORS (millions of $)

Net sales

Operating income

EBITDA (1)

Net income

Cash flow from operations

Capital expenditures

BALANCE SHEET (millions of $)

Total assets

Total borrowings

Net financial debt / (cash) (2)

Total liabilities

Shareholders’ equity including non-controlling interests

PER SHARE / ADS DATA ($ per share / per ADS) (3)

Number of shares outstanding (4) (thousands of shares)

Earnings per share

Earnings per ADS

Dividends per share (5)

Dividends per ADS (5)

ADS Stock price at year-end

NUMBER OF EMPLOYEES (4)

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2013

2012

2011

2,612

1,049

3,661

2,611

988

3,599

2,676

1,188

3,864

2,806

1,188

3,994

10,597

10,834

2,185

2,795

1,574

2,355

753

15,931

931

(911)

3,461

12,470

2,357

2,875

1,702

1,860

790

15,960

1,744

271

4,460

11,500

2,613

1,134

3,747

2,683

1,073

3,756

9,972

1,845

2,399

1,421

1,283

863

14,864

931

(324)

3,691

11,173

1,180,537

1.31

2.63

0.43

0.86

43.69

26,825

1.44

2.88

0.43

0.86

41.92

26,673

1.13

2.26

0.38

0.76

37.18

26,980

1. Defined as operating income plus depreciation, amortization and impairment charges/(reversals)
and in 2012 excludes a non-recurring gain of $49 million, recorded in Other operating income
corresponding to a tax related lawsuit collected in Brazil.

2. Defined as borrowings less cash and cash equivalents and other current investments.

3. Each ADS represents two shares.

5. Proposed or paid in respect of the year.

4. As of December 31.

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Letter from the Chairman

Dear Shareholders,

Tenaris had another good year in 2013, as we maintained our EBITDA(1) and industry-leading operating
margins in line with those of the previous year, despite a slowdown in the North American market and
lower prices for less differentiated products. This result was driven by an ongoing transformation in our
product mix towards high-value premium OCTG products, our positioning in the Eastern Hemisphere
and the performance of our industrial system, where our indicators for safety, quality, compliance and
capacity utilization all showed improvement.

Over the past three years, our sales of premium OCTG products have doubled in volume while sales
of less differentiated products have declined. We strengthened our premium connection portfolio this
year with new products for the most complex deepwater and high pressure, high temperature (HPHT)
applications. Our performance in successfully meeting the exacting testing and development requirements
for the Mars B project in the Gulf of Mexico with our new Wedge 623™ Dopeless® and Blue® Riser
connections was recognized by Shell with its first ever Global Wells Installed Equipment Quality Award.

Our operations in the Eastern Hemisphere had a record year, with sales in the Middle East and Africa growing
70% year on year. In Saudi Arabia, where drilling activity in sour and high pressure gas fields is showing
strong growth, we are investing in a new heat treatment facility and expanding our local premium threading
operation. In sub-Saharan Africa, we are expanding our local manufacturing and service capabilities to
support the complex offshore operations of our customers with our enhanced product portfolio.

In North America, however, our sales in 2013 were affected by a slowdown in drilling activity and an
adverse competitive environment in the less demanding segments. Our focus is on the segments in which
we can achieve differentiation on products and services: Gulf of Mexico, the main shale plays, the thermal
projects in Canada and throughout Mexico.

With our new rolling mill project in Bay City, we will increase our capital expenditure outlays over the
next three years. We received the necessary environmental permits in July, and, since then, have made good
progress, advancing with earthworks, equipment design and engineering and resource planning. Elsewhere,
we started up a new integrated premium threading line in Romania and increased heat treatment capacity
in Argentina. We will continue to invest in transforming our integrated industrial system to meet growing
demand for premium products.

The Bay City mill has been qualified by the Texas Commission for Environmental Quality as a minor source
of emissions. In addition, we are following construction specifications to achieve the LEED (Leadership in
Energy and Environmental Design) certification from the U.S. Green Building Council. Throughout our
globally integrated industrial system, we are working to improve energy efficiency and investing to minimize
the environmental impact of our operations. And we are certifying our mills under ISO 14001 and OSHAS
18000 standards for environment and safety management to ensure a consistent management approach.

(1) EBITDA is defined as operating income plus depreciation, amortization and impairment charges/(reversals).

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Our Safe Hour program, implemented two year ago, is delivering improvements in our safety indicators. Over
the past three years, the rate of accidents resulting in injuries has declined over 40% but we still consider that
we have room for improvement. Safety is an essential element of our competitive differentiation in the eyes of
our customers and the communities where we operate.

TenarisUniversity continues to expand its field of action. Today, it has its own facilities in many Tenaris
plants and has created more than 1,600 proprietary courses in its six schools. It provides 1.3 million hours
of training annually, accounting for 2.3% of the total number of hours worked. With a mandate to adopt
the most advanced training techniques using web-based tools, we became the first company to sign an
agreement to become part of the educational institutions that participate in edX, the open, online learning
initiative founded by Harvard and MIT.

Education is a fundamental value for Tenaris, an essential component of an industrial culture that
identifies progress with that of the communities where we operate, providing a factor for integration and
social mobility. In a program to strengthen technical education in the communities where we operate, we
opened the first Roberto Rocca Technical School in Campana. The first intake of 60 students was selected
in an open competition and all have scholarships based on their families’ financial situation. This new
school will also be responsible for producing content and teaching techniques to strengthen public and
private technical education in all the communities where we operate.

In an environment of mixed markets, our operating and financial results for 2013 reflect the underlying
strengths of the company and our continuing progress in many areas. We had an EBITDA of $2.8 billion
on sales of $10.6 billion and generated $1.6 billion of free cash flow to end the year with a net cash position
of $0.9 billion. Earnings per share declined 9% compared to the previous year and we are proposing to
maintain the annual dividend at last year’s level.

Looking ahead, we see many opportunities in a dynamic industry environment. We are well positioned to
benefit from market developments with energy reform in Mexico, the shale developments in North America
and Argentina, the growth in gas drilling in the Middle East and the development of complex deepwater
projects worldwide.

In closing, I would like to thank our employees for the commitment and dedication they have shown throughout
the year. It is their contribution day after day that makes the difference. I would also like to express my thanks
to our customers, suppliers and shareholders for their continuing support and confidence in Tenaris.

March 28, 2014

Paolo Rocca

Company profile

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Tenaris is a leading supplier of tubes and related services for the world’s energy industry and certain other
industrial applications. Our mission is to deliver value to our customers through product development,
manufacturing excellence and supply chain management. We seek to minimize risk for our customers and
help them reduce costs, increase flexibility and improve time-to-market. Our employees around the world
are committed to continuous improvement by sharing knowledge across a single global organization.

Information
on Tenaris

The Company
Our holding company’s legal and commercial name
is Tenaris S.A. The Company was established as a
public limited liability company (société anonyme)
organized under the laws of the Grand Duchy of
Luxembourg. The Company’s registered office is
located at 29 avenue de la Porte-Neuve, 3rd Floor,
L-2227, Luxembourg, telephone (352) 2647-8978.

The Company has no branches. For information on
the Company’s subsidiaries, see note 30 “Principal
subsidiaries” to our audited consolidated financial
statements included in this annual report.

Overview
We are a leading global manufacturer and supplier
of steel pipe products and related services for the
world’s energy industry and for other industrial
applications. Our customers include most of the
world’s leading oil and gas companies as well as
engineering companies engaged in constructing oil
and gas gathering, transportation, processing and
power generation facilities. Our principal products
include casing, tubing, line pipe, and mechanical
and structural pipes.

Over the last two decades, we have expanded our
business globally through a series of strategic
investments. We now operate an integrated
worldwide network of steel pipe manufacturing,
research, finishing and service facilities with
industrial operations in the Americas, Europe, Asia
and Africa and a direct presence in most major oil
and gas markets.

to minimize risk for our customers and help them
reduce costs, increase flexibility and improve
time-to-market. Our employees around the world are
committed to continuous improvement by sharing
knowledge across a single global organization.

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History and Development of Tenaris
Tenaris began with the formation of Siderca
S.A.I.C., or Siderca, the sole Argentine
producer of seamless steel pipe products, by San
Faustin’s predecessor in Argentina in 1948. We
acquired Siat, an Argentine welded steel pipe
manufacturer, in 1986. We grew organically in
Argentina and then, in the early 1990s, began
to evolve beyond this initial base into a global
business through a series of strategic investments.
These investments included the acquisition,
directly or indirectly, of controlling or strategic
interests in the following companies:

•

Tubos de Acero de México S.A., or Tamsa, the sole
Mexican producer of seamless steel pipe products
(June 1993);
Dalmine S.p.A., or Dalmine, a leading
Italian producer of seamless steel pipe products
(February 1996);
Tubos de Acero de Venezuela S.A., or Tavsa,
the sole Venezuelan producer of seamless steel
pipe products (October 1998)(1);
Confab Industrial S.A., or Confab, the leading
Brazilian producer of welded steel pipe products
(a controlling interest in August 1999, and the
remainder during the second quarter of 2012);

Our mission is to deliver value to our customers
through product development, manufacturing
excellence, and supply chain management. We seek

(1) In 2009, the Venezuelan government nationalized Tavsa and other
companies in which we had investments. For more information on
the Tavsa nationalization process, see note 31 “Nationalization
of Venezuelan Subsidiaries” to our audited consolidated financial
statements included in this annual report.

10.

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NKKTubes, a leading Japanese producer
of seamless steel pipe products (August 2000);
Algoma Tubes Inc., or AlgomaTubes, the sole
Canadian producer of seamless steel pipe
products (October 2000);
S.C. Silcotub S.A., or Silcotub, a leading Romanian
producer of seamless steel pipe products (July 2004);
Maverick Tube Corporation, or Maverick, a
leading North American producer of welded
steel pipe products with operations in the United
States, Canada and Colombia (October 2006);
Hydril Company, or Hydril, a leading North
American manufacturer of premium connection
products for oil and gas drilling production
(May 2007);
Seamless Pipe Indonesia Jaya, or SPIJ, an Indonesian
oil country tubular goods, or OCTG, processing
business with heat treatment and premium
connection threading facilities (April 2009);
Pipe Coaters Nigeria Ltd, the leading company
in the Nigerian coating industry (November 2011);
Usinas Siderúrgicas de Minas Gerais S.A., or
Usiminas, where through our subsidiary Confab,
we hold an interest representing 5.0% of the shares
with voting rights and 2.5% of the total share
capital (January 2012); and
a sucker rod business, in Campina, Romania
(February 2012).

In addition, we have established a global network
of pipe finishing, distribution and service facilities
with a direct presence in most major oil and gas
markets and a global network of research and
development centers.

tubular products and services to the energy and
other industries by:

•

pursuing strategic investment opportunities in
order to strengthen our presence in local and
global markets;
expanding our comprehensive range of products
and developing new high-value products designed
to meet the needs of customers operating in
increasingly challenging environments;
securing an adequate supply of production inputs
and reducing the manufacturing costs of our core
products; and
enhancing our offer of technical and pipe
management services designed to enable customers
to optimize their selection and use of our products
and reduce their overall operating costs.

Pursuing strategic investment opportunities

and alliances
We have a solid record of growth through strategic
investments and acquisitions. We pursue selective
strategic investments and acquisitions as a means
to expand our operations and presence in selected
markets, enhance our global competitive position
and capitalize on potential operational synergies.
Our track record on companies’ acquisitions is
described above (See “History and Development of
Tenaris”). In addition, we are currently building a
new greenfield seamless mill in Bay City, Texas. The
new facility will include a state-of-the-art rolling
mill as well as finishing and heat treatment lines. We
plan to bring the 600,000 tons per year capacity mill
and logistics center into operation in 2016, within a
budget in a range of $1.5 billion to $1.8 billion.

Business Overview
Our business strategy is to continue expanding our
operations worldwide and further consolidate our
position as a leading global supplier of high-quality

Developing high-value products
We have developed an extensive range of high-value
products suitable for most of our customers’
operations using our network of specialized

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research and testing facilities and by investing in our
manufacturing facilities. As our customers expand
their operations, we seek to supply high-value
products that reduce costs and enable them to operate
safely in increasingly challenging environments.

Securing inputs for our manufacturing operations
We seek to secure our existing sources of raw material
and energy inputs, and to gain access to new sources,
of low-cost inputs which can help us maintain or
reduce the cost of manufacturing our core products
over the long term. For example, in February 2014, we
entered into an agreement with our affiliates Ternium
and Tecpetrol to build a natural gas-fired combined
cycle electric power plant in Mexico¸ expected to be
completed in 2016, which would supply Tenaris’s and
Ternium’s respective Mexican industrial facilities.
For information on the new power plant, see note
27 “Business combinations, other acquisitions and
investments- Mexican Power Plant Investment”
to our audited consolidated financial statements
included in this annual report.

Our Competitive Strengths
We believe our main competitive strengths include:
our global production, commercial and
distribution capabilities, offering a full product
range with flexible supply options backed up by
local service capabilities in important oil and gas
producing and industrial regions around the world;
our ability to develop, design and manufacture
technologically advanced products;
our solid and diversified customer base and
historic relationships with major international
oil and gas companies around the world, and our
strong and stable market shares in the countries in
which we have manufacturing operations;
our proximity to our customers;
our human resources around the world with their
diverse knowledge and skills;
our low-cost operations, primarily at state-of-the-
art, strategically located production facilities with
favorable access to raw materials, energy and labor,
and more than 50 years of operating experience; and
our strong financial condition.

•

•
•

•

Enhancing our offer of technical and pipe

management services
We continue to enhance our offer of technical
and pipe management services for our customers
worldwide. Through the provision of these services,
we seek to enable our customers to optimize their
operations, reduce costs and to concentrate on
their core businesses. They are also intended to
differentiate us from our competitors and further
strengthen our relationships with our customers
worldwide through long-term agreements. For
example, in Mexico, since 1994, we supply Pemex,
the state-owned oil company, one of the world’s
largest crude oil and condensates producers under
just-in-time, or JIT, agreements, which allow us to
provide it with comprehensive pipe management
services on a continuous basis.

Business Segments
Tenaris has one major business segment, Tubes,
which is also the reportable operating segment.

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pipe products from the oil and gas industry has
historically been volatile and depends primarily
upon the number of oil and natural gas wells
being drilled, completed and reworked, and the
depth and drilling conditions of these wells. Sales
are generally made to end users, with exports
being done through a centrally managed global
distribution network and domestic sales made
through local subsidiaries. Corporate general and
administrative expenses have been allocated to the
Tubes segment.

Others include all other business activities and
operating segments that are not required to be
separately reported, including the production
and selling of sucker rods, welded steel pipes for
electric conduits, industrial equipment, coiled
tubing, energy and raw materials that exceed
internal requirements.

For more information on our business segments,
see accounting policy C “Segment information”
to our audited consolidated financial statements
included in this annual report.

Our Products
Our principal finished products are seamless
and welded steel casing and tubing, line pipe and
various other mechanical and structural steel
pipes for different uses. Casing and tubing are also
known as oil country tubular goods or OCTG.
We manufacture our steel pipe products in a wide
range of specifications, which vary in diameter,
length, thickness, finishing, steel grades, threading
and coupling. For most complex applications,
including high pressure and high temperature
applications, seamless steel pipes are usually

specified and, for some standard applications,
welded steel pipes can also be used.

Casing
Steel casing is used to sustain the walls of oil and
gas wells during and after drilling.

Tubing
Steel tubing is used to conduct crude oil and natural
gas to the surface after drilling has been completed.

Line pipe
Steel line pipe is used to transport crude oil and
natural gas from wells to refineries, storage tanks
and loading and distribution centers.

Mechanical and structural pipes
Mechanical and structural pipes are used by
general industry for various applications, including
the transportation of other forms of gas and
liquids under high pressure.

Cold-drawn pipe
The cold-drawing process permits the production of
pipes with the diameter and wall thickness required
for use in boilers, superheaters, condensers, heat
exchangers, automobile production and several other
industrial applications.

Premium joints and couplings
Premium joints and couplings are specially designed
connections used to join lengths of steel casing
and tubing for use in high temperature or high
pressure environments. A significant portion of our
steel casing and tubing products are supplied with
premium joints and couplings. We own an extensive
range of premium connections, and following
the integration of Hydril’s premium connections

business, we market our premium connection
products under the TenarisHydril brand name. In
addition, we hold licensing rights to manufacture and
sell the Atlas Bradford range of premium connections
outside of the United States.

complexities of oil and gas projects with innovative
applications. In addition, our global technical sales
team is made up of experienced engineers who
work with our customers to identify solutions for
each particular oil and gas drilling environment.

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Coiled tubing
Coiled tubing is used for oil and gas drilling and
well workovers and for subsea pipelines.

Product development and research currently
being undertaken are focused on the increasingly
challenging energy markets and include:

Other Products
We also manufacture sucker rods used in oil
extraction activities, industrial equipment of
various specifications and diverse applications,
including liquid and gas storage equipment, and
welded steel pipes for electric conduits used in
the construction industry. In addition, we sell raw
materials that exceed our internal requirements.

Research and Development
Research and development, or R&D, of new
products and processes to meet the increasingly
stringent requirements of our customers is an
important aspect of our business.

R&D activities are carried out primarily at our
specialized research facilities located at Campana
in Argentina, at Veracruz in Mexico, at Dalmine in
Italy, at the product testing facilities of NKKTubes
in Japan and at the research facilities of the Centro
Sviluppo Materiali S.p.A, or CSM, in Rome, in
which we have a 4% interest. In addition, we are
building a new R&D center at Ilha do Fundao,
Rio de Janeiro, Brazil, expected to start operating
in the second quarter of 2014. We strive to engage
some of the world’s leading industrial research
institutions to solve the problems posed by the

•

•
•

proprietary premium joint products including
Dopeless® technology;
heavy wall deep water line pipe, risers and
welding technology;
proprietary steels;
tubes and components for the car industry
and mechanical applications;
tubes for boilers;
welded pipes for oil and gas and other
applications;
sucker rods; and
coatings.

In addition to R&D aimed at new or improved
products, we continuously study opportunities
to optimize our manufacturing processes. Recent
projects in this area include modeling of rolling and
finishing process and the development of different
process controls, with the goal of improving
product quality and productivity at our facilities.

We seek to protect our intellectual property, from
R&D and innovation, through the use of patents
and trademarks that allow us to differentiate
ourselves from our competitors.

We spent $106 million for R&D in 2013, compared
to $83 million both in 2012 and in 2011.

NET SALES

EARNINGS PER SHARE

NET SALES BY

BUSINESS SEGMENT

NET SALES BY

REGIONAL AREA

TUBES
93%

OTHER
7%

MIDDLE EAST
& AFRICA
20%

FAR EAST

& OCEANIA

PERSONNEL EMPLOYED

PER COUNTRY

ROMANIA

COLOMBIA

INDONESIA

CANADA

JAPAN

OTHER

COUNTRIES

D
S
U

1.8

1.6

1.4

1.2

1.0

1.44

1.31

0.98

0.95

1.13

N
O
I
L
L
I
M

D
S
U

12000

10000

8000

6000

10834

10597

9972

8149

7712

0.8

4000

Tenaris in numbers

2000

0.6

0.4

0.2

2009 2010 2011 2012

2013

2009 2010 2011 2012 2013

Trend information

Leading indicators

RIG COUNT INTERNATIONAL
EARNINGS PER SHARE

NET SALES BY
NET SALES BY
BUSINESS SEGMENT
BUSINESS SEGMENT
MISC
GAS

OIL

RIG COUNT USA AND CANADA
NET SALES
NET SALES
NET SALES BY
NET SALES BY
NET SALES BY
BUSINESS SEGMENT
REGIONAL AREA
REGIONAL AREA
GAS

OIL

EUROPE
9%

SOUTH
AMERICA
24%

NORTH

AMERICA

42%

BRAZIL

12%

ITALY

UNITED

STATES

13%

ARGENTINA

24%

MEXICO

20%

LOST TIME ACCIDENTS INDEX
EARNINGS PER SHARE
EARNINGS PER SHARE
PERSONNEL EMPLOYED
PERSONNEL EMPLOYED
NET SALES BY
REGIONAL AREA
PER COUNTRY
PER COUNTRY

RETURN ON EQUITY
NET SALES BY
NET SALES BY
PERSONNEL EMPLOYED
BUSINESS SEGMENT
BUSINESS SEGMENT
PER COUNTRY

EBITDA MARGIN

NET SALES BY

REGIONAL AREA

NET SALES

EARNINGS PER SHARE

14.

s
i
r
a
n
e
T

D
S
U

1.8

1.6

1.4
8149
1.2

1.8

1.6

1.4

1.2
7712

10834

10597
1.44

9972

1.44
1.31

1.31

1.0

0.98

0.98
0.95

1.13
0.95

1.13

0.8

0.6

0.4

0.2

1.0

0.8

0.6

0.4

0.2

0
2009 2010 2011 2012 2013

2013
2009 2010 2011 2012 2013

2009 2010 2011 2012

S
G
R

1400
D
S
U
1200
1.8

1.6
1000
1.4
800
1.2

1.0
600
0.8
400
0.6

0.4
200
0.2
0
0

TUBES
93%

228

897

1.13

238

825

0.95

209

764
0.98

226

1.44
960

242

1004
1.31

2009 2010 2011 2012
2013
2009 2010 2011 2012 2013

OTHER
7%

TUBES
OTHER
93%
7%

S
G
R

MIDDLE EAST
MIDDLE EAST
& AFRICA
& AFRICA
N
N
20%
20%
O
O
I
I
L
L
L
L
I
I
M
M

D
S
U

FAR EAST
& OCEANIA
OTHER
5%
7%

N
FAR EAST
MIDDLE EAST
S
R
S
O
U
T
& OCEANIA
& AFRICA
I
L
N
O
L
E
H
I
5%
20%
M
D
N
C
R
A
C
E
M
A
P

COLOMBIA
ROMANIA
ROMANIA
2%
6%
6%
INDONESIA
INDONESIA
3%
3%
D
S
CANADA
CANADA
U
5%
5%
1.8
1.8

D
S
U

COLOMBIA
2%

JAPAN
ROMANIA
JAPAN
FAR EAST
6%
2%
2%
& OCEANIA
OTHER
OTHER
5%
COUNTRIES
COUNTRIES
5%
5%

TUBES
93%
INDONESIA
3%
%
CANADA
5%
30

COLOMBIA
2%
TUBES
93%

12000

10000

1027

9972
658

10834
10597

10597

10834
9972
503

8000

8149
1092

8000

8149
7712

6000
921

6000

1263

7712
1621

1606

1.6

1.4

1.2

1.0
3.4
0.8

0.6

1.6

1.4

1.2

0.98
1.0
3.7
0.8

0.6

1.44

1.44
1.31

1.31

0.98
0.95
3.2

1.13
0.95

3.0

1.13

2.2

4000

4000
790
2000

2000
380
EUROPE
0
9%
2009

EUROPE
NORTH
NORTH
EUROPE
SOUTH
SOUTH
0
0
AMERICA
AMERICA
9%
9%
AMERICA
AMERICA
2010
2011
2012 2013
2009 2010 2011 2012
2013
2009 2010 2011 2012
2013
42%
42%
24%
24%

0.4
BRAZIL
0.2
12%
0
ITALY
9%

0.4
BRAZIL
0.2
12%
MEXICO
MEXICO
UNITED
UNITED
NORTH
SOUTH
0
20%
20%
STATES
STATES
AMERICA
ITALY
AMERICA
13%
13%
2009 2010 2011 2012
2013
2009 2010 2011 2012 2013
2009 2010 2011 2012 2013
42%
9%
24%

ARGENTINA
ARGENTINA
24%
24%

5
BRAZIL
12%
0
ITALY
9%

UNITED
STATES
13%

2009 2010 2011 2012

Source: Baker Hughes

RIG COUNT INTERNATIONAL

RIG COUNT USA AND CANADA

LOST TIME ACCIDENTS INDEX

RIG COUNT INTERNATIONAL
RIG COUNT INTERNATIONAL
LOST TIME ACCIDENTS INDEX
RETURN ON EQUITY
RETURN ON EQUITY

RETURN ON EQUITY

RIG COUNT USA AND CANADA
EBITDA MARGIN

EBITDA MARGIN

LOST TIME ACCIDENTS INDEX

OIL

GAS

MISC

OIL

OIL
GAS

GAS

MISC
GAS

OIL

GAS

OIL

GAS

MISC

OIL

GAS

242

226

242

1004

960

1004

226

228

960

897

228

238

897

825

238

209

825

764

S
G
R

238

825

209

764

242

1027
658
1004

226
1027

960
1092

228

897
1092

S
G
R

658
503

503

1621

1621
1606

1606

921

1263

790

380

2009 2010 2011 2012
2011
2010

2009
2010

2009

2013
2012 2013
2011

2012 2013

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

921
3

1
380
0
2009

5
1092
4
3.4
3

2
790
1

1027

658

503

3.7
3.4
1263

1621
3.7
3.2

1606

3.2
3.0

3.0

2.2

0
2009 2010 2011 2012
2009 2010 2011 2012
2013
2012 2013
2010
2011

2013

S
G
R

1400
%

1200
30

1000
25

24
1000
25
209

800
20

600
15
3.4

400
10

800
20

764
600
3.7
15

400
10

200
5

50
48
242
226

242

1004
960

1004

238
24

209

825
764

3.2

41
31

228
238

897
825

3.0

48
41
226
228

960
897

2.2

0
0

0
0
2009 2010 2011 2012
2009 2010 2011 2012
2013

2009 2010 2011 2012
2013
2009 2010 2011 2012
2013

2009 2010 2011 2012

2013
2013

S
G
R

1027

1027
658

658
503

503

1092

1621

1621
1606

1606

921

1263

790

15
380

380

10
2012 2013
2009
2010
2011
2012 2013
2009
2010
2011
2009 2010 2011 2012
2013
2009 2010 2011 2012 2013
2009 2010 2011 2012 2013

Source: Baker Hughes

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

4
3.4
3

3.7
3.4

3.7

3.2

3.0

2.2

0
2009 2010 2011 2012
2009 2010 2011 2012 2013

2009 2010 2011 2012

NET SALES

10834

10597

10000

9972

8000

8149

7712

2009 2010 2011 2012

2013

RIG COUNT INTERNATIONAL

12000

6000

4000

2000

1400

1200

1000

800

600

400

200

12000

10000

8000

6000

4000

2000

1400

1200

1000

800

600

400

200

2009 2010 2011 2012

2013

Source: Baker Hughes

OTHER

MIDDLE EAST

& AFRICA

20%

FAR EAST

& OCEANIA

JAPAN

OTHER

COUNTRIES

PERSONNEL EMPLOYED

PER COUNTRY

ROMANIA

COLOMBIA

JAPAN

INDONESIA

CANADA

OTHER

COUNTRIES

ARGENTINA

24%

MEXICO

20%

2013

EUROPE

SOUTH

NORTH

AMERICA

2009 2010 2011 2012 2013

24%

42%

BRAZIL

12%

ITALY

UNITED

MEXICO

STATES

20%

13%

ARGENTINA

24%

RETURN ON EQUITY

EBITDA MARGIN

2013

2009 2010 2011 2012

2013

2009 2010 2011 2012 2013

NET SALES

EARNINGS PER SHARE

NET SALES

NET SALES BY
NET SALES BY
EARNINGS PER SHARE
BUSINESS SEGMENT
BUSINESS SEGMENT

NET SALES BY
REGIONAL AREA

NET SALES BY
NET SALES BY
REGIONAL AREA
BUSINESS SEGMENT

12000

6000

4000

2000

10834

10597

10000

9972

8149

8000

7712

1.44

9972

10834
1.44

10597

1.31

8149

1.0

0.98

0.95

7712

1.13

0.95

1.13

2009 2010 2011 2012

2013

2009 2010 2011 2012 2013
2009 2010 2011 2012 2013
2009 2010 2011 2012
2013

1.8

12000

1.6

1.4

10000

1.4

1.2

8000

0.8

6000

0.8

0.6

4000

0.4

0.2

2000

0.2

TUBES
93%

D
S
U

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

OTHER
7%

MIDDLE EAST
MIDDLE EAST
& AFRICA
& AFRICA
TUBES
20%
20%
93%

FAR EAST
FAR EAST
& OCEANIA
& OCEANIA
OTHER
5%
5%
7%

1.44

1.31

0.98

0.95

1.13

2009 2010 2011 2012 2013

EUROPE
EUROPE
9%
9%

SOUTH
SOUTH
AMERICA
AMERICA
24%
24%

NORTH
NORTH
AMERICA
AMERICA
42%
42%

PERSONNEL EMPLOYED
PERSONNEL EMPLOYED
NET SALES BY
PER COUNTRY
PER COUNTRY
REGIONAL AREA
ROMANIA
ROMANIA
6%
6%
MIDDLE EAST
INDONESIA
INDONESIA
& AFRICA
3%
3%
20%
CANADA
CANADA
5%
5%

COLOMBIA
COLOMBIA
2%
2%

JAPAN
JAPAN
2%
2%
FAR EAST
& OCEANIA
OTHER
OTHER
5%
COUNTRIES
COUNTRIES
5%
5%

15.
PERSONNEL EMPLOYED
PER COUNTRY

ROMANIA
6%

COLOMBIA
2%

INDONESIA
3%
CANADA
5%

t
r
o
p
e
R

JAPAN
2%
a
OTHER
u
n
COUNTRIES
n
5%
A

BRAZIL
12%

ITALY
9%

EUROPE
ITALY
9%
9%

ARGENTINA
24%

UNITED
STATES
13%

MEXICO
SOUTH
20%
AMERICA
24%

MEXICO
20%

NORTH
AMERICA
42%

BRAZIL
12%

ITALY
9%

UNITED
STATES
13%

ARGENTINA
24%

MEXICO
20%

NET SALES

EARNINGS PER SHARE

RIG COUNT INTERNATIONAL

NET SALES BY

RIG COUNT USA AND CANADA

RIG COUNT USA AND CANADA
RIG COUNT INTERNATIONAL

NET SALES BY

BUSINESS SEGMENT

REGIONAL AREA

LOST TIME ACCIDENTS INDEX
RIG COUNT USA AND CANADA

LOST TIME ACCIDENTS INDEX
PERSONNEL EMPLOYED
PER COUNTRY

RETURN ON EQUITY

RETURN ON EQUITY
LOST TIME ACCIDENTS INDEX

EBITDA MARGIN

EBITDA MARGIN
RETURN ON EQUITY

EBITDA MARGIN

N
O
I
L
L
I
M
R
E
P

S
R
U
O
H
N
A
M

S
T
N
E
D
C
C
A

30
7

25
6

5
20

%
%

35
30

30
25

4
15

3.7

3.4

3.2

3
10
2
5
1
0
0
2009 2010 2011 2012

3.0

2.2

2009 2010 2011 2012
2009 2010 2011 2012

2013

2013
2013

20
25

15
20

10
15
5

10
0
2009 2010 2011 2012 2013

2009 2010 2011 2012 2013
2009 2010 2011 2012
2013

2009 2010 2011 2012 2013

1.8

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

12000

10000

8000

6000

4000

2000

1400

1200

1000

800

600

400

200

10834

10597

9972

8149

7712

1.44

1.31

0.98

0.95

1.13

OIL

GAS

MISC

GAS

OTHER

242

226

1004

960

1200

1000

238

228

238

228

209

764

897

825

897

825

TUBES

93%

1400

800

600

400

200

OIL

MIDDLE EAST

& AFRICA

20%

1400

209

1092

1027

238

1027

228

658

1092

825

897

1263

790

764

921

600

921

1200

1000

800

400

200

MISC
FAR EAST
& OCEANIA
5%

242

503
1004

226
658

503

960

1621

1606

2009 2010 2011 2012

2013

2009 2010 2011 2012 2013

2009 2010 2011 2012

2013

380

EUROPE

SOUTH

AMERICA

2009

2010

2011

24%

2011

2012 2013
2009 2010 2011 2012

NORTH
AMERICA
2012 2013
42%
2013

OIL

ROMANIA
N
N
S
S
6%
R
R
S
S
O
O
U
U
T
T
I
I
L
L
N
N
O
O
INDONESIA
L
L
E
E
H
H
I
I
M
M
D
D
3%
N
N
C
C
R
R
A
A
C
C
E
E
M
M
A
A
CANADA
P
P
S
G
5%
R
7

4
3.4
3

BRAZIL
1
1
12%
0
ITALY
9%

COLOMBIA
GAS
2%

JAPAN
2%
OTHER
COUNTRIES
5%

3.7

3.4
921

1092

3.7

3.2

790

1027

658

503

3.2
3.0
1263

1606

1621
3.0

2.2

ARGENTINA
24%

UNITED
380
STATES
13%
2009 2010 2011 2012
2009

0
2009 2010 2011 2012
2011

MEXICO
20%

2010

2013

2013
2012 2013

Source: Baker Hughes

RIG COUNT INTERNATIONAL

RIG COUNT USA AND CANADA

LOST TIME ACCIDENTS INDEX

RETURN ON EQUITY

EBITDA MARGIN

OIL

GAS

MISC

OIL

GAS

242

1004

226

960

228

897

238

825

209

764

1027

658

503

1621

1606

921

1263

1092

790

380

3.7

3.4

3.2

3.0

2.2

2009 2010 2011 2012

2013

2009

2010

2011

2012 2013

2009 2010 2011 2012

2013

2009 2010 2011 2012

2013

2009 2010 2011 2012 2013

Source: Baker Hughes

16.

s
i
r
a
n
e
T

Principal risks
and uncertainties

We face certain risks associated to our business
and the industry in which we operate. We are a
global steel pipe manufacturer with a strong focus
on manufacturing products and related services for
the oil and gas industry. Demand for our products
depends primarily on the level of exploration,
development and production activities of oil and
gas companies which is affected by current and
expected future prices of oil and natural gas.
Several factors, such as the supply and demand
for oil and gas, and political and global economic
conditions, affect these prices. Performance may
be further affected by changes in governmental
policies, the impact of credit restrictions on our
customers’ ability to perform their payment
obligations with us and any adverse economic,
political or social developments in our major
markets. Furthermore, competition in the global
market for steel pipe products may cause us to lose
market share and hurt our sales and profitability
and our profitability may be hurt if increases in
the cost of raw materials and energy could not be
offset by higher selling prices. In addition, there
is an increased risk of unfairly-traded steel pipe
imports in markets in which Tenaris produces and
sells its products. A recession in the developed
countries, a cooling of emerging market economies
or an extended period of below-trend growth
in the economies that are major consumers of
steel pipe products would likely result in reduced
demand of our products, adversely affecting our
revenues, profitability and financial condition.

We have significant operations in various countries,
including Argentina, Brazil, Canada, Colombia,
Italy, Japan, Mexico, Romania and the United
States, and we sell our products and services
throughout the world. Therefore, like other

companies with worldwide operations, our business
and operations have been, and could in the future
be, affected from time to time to varying degrees
by political, economical and social developments
and changes in, laws and regulations. These
developments and changes may include, among
others, nationalization, expropriations or forced
divestiture of assets; restrictions on production,
imports and exports, interruptions in the supply of
essential energy inputs; exchange and/or transfer
restrictions, inability or increasing difficulties to
repatriate income or capital or to make contract
payments; inflation; devaluation; war or other
international conflicts; civil unrest and local security
concerns, including high incidences of crime and
violence involving drug trafficking organizations
that threaten the safe operation of our facilities
and operations; direct and indirect price controls;
tax increases and changes in the interpretation,
application or enforcement of tax laws and other
retroactive tax claims or challenges; changes in laws,
norms and regulations; cancellation of contract
rights; and delays or denials of governmental
approvals. As a global company, a portion of our
business is carried out in currencies other than
the U.S. dollar, which is the Company’s functional
currency. As a result, we are exposed to foreign
exchange rate risk, which could adversely affect our
financial position and results of operations.

In 2009, Venezuela’s former President Hugo
Chávez announced the nationalization of Tavsa,
Matesi, Materiales Siderúrgicos S.A., or Matesi,
and Complejo Siderurgico de Guayana, C.A.,
or Comsigua, and Venezuela formally assumed
exclusive operational control over the assets of
Tavsa. In 2010, Venezuela’s National Assembly
declared Matesi’s assets to be of public and social

17.

t
r
o
p
e
R

a
u
n
n
A

interest and ordered the Executive Branch to take
the necessary measures for the expropriation of
such assets. Our investments in Tavsa, Matesi
and Comsigua are protected under applicable
bilateral investment treaties, including the
bilateral investment treaty between Venezuela
and the Belgian-Luxembourgish Union, and
Tenaris continues to reserve all of its rights under
contracts, investment treaties and Venezuelan
and international law. Tenaris has consented to
the jurisdiction of the International Centre for
Settlement of Investment Disputes, or ICSID, in
connection with the nationalization process. In
August 2011 and July 2012, respectively, Tenaris
and its wholly-owned subsidiary Talta - Trading
e Marketing Sociedad Unipessoal Lda, or
Talta, initiated arbitration proceedings against
Venezuela before the ICSID seeking adequate
and effective compensation for the expropriation
of their investments in Matesi and Tavsa and
Comsigua. However, we can give no assurance
that the Venezuelan government will agree to
pay a fair and adequate compensation for our
interest in Tavsa, Matesi and Comsigua, or that
any such compensation will be freely convertible
into or exchangeable for foreign currency. For
further information on the nationalization
of the Venezuelan subsidiaries, see note 31
“Nationalization of Venezuelan Subsidiaries”
to our audited consolidated financial statements
included in this annual report.

A key element of our business strategy is to
develop and offer higher value-added products
and services and to continuously identify and
pursue growth-enhancing strategic opportunities.
We must necessarily base any assessment
of potential acquisitions, joint ventures and

investments, on assumptions with respect to
operations, profitability and other matters that
may subsequently prove to be incorrect. Failure to
successfully implement our strategy, or to integrate
future acquisitions and strategic investments, or
to sell acquired assets or business unrelated to our
business under favorable terms and conditions,
could affect our ability to grow, our competitive
position and our sales and profitability. In
addition, failure to agree with our joint venture
partner in Japan on the strategic direction of our
joint operations may have an adverse impact on
our operations in Japan.

We may be required to record a significant charge
to earnings if we must reassess our goodwill or
other assets as a result of changes in assumptions
underlying the carrying value of certain assets,
particularly as a consequence of deteriorating
market conditions. At December 31, 2013 we
had $1,807 million in goodwill corresponding
mainly to the acquisition of Hydril, in 2007 ($920
million) and Maverick, in 2006 ($771 million). As
of December 31, 2012, an impairment test over
our investment in Usiminas was performed and,
subsequently, the goodwill of such investment was
written down by $74 million. If our management
were to determine in the future that the goodwill
or other assets were impaired, particularly as a
consequence of deteriorating market conditions,
we would be required to recognize a non-cash
charge to reduce the value of these assets, which
would adversely affect our results of operations.

Potential environmental, product liability and
other claims arising from the inherent risks
associated with the products we sell and the
services we render, including well failures, line

18.

s
i
r
a
n
e
T

pipe leaks, blowouts, bursts and fires, that
could result in death, personal injury, property
damage, environmental pollution or loss of
production could create significant liabilities for
us. Environmental laws and regulations may, in
some cases, impose strict liability (even joint and
several strict liability) rendering a person liable for
damages to natural resources or threats to public
health and safety without regard to negligence or
fault. In addition, we are subject to a wide range
of local, provincial and national laws, regulations,
permit requirements and decrees relating to the
protection of human health and the environment,
including laws and regulations relating to
hazardous materials and radioactive materials and
environmental protection governing air emissions,
water discharges and waste management. Laws
and regulations protecting the environment have
become increasingly complex and more stringent
and expensive to implement in recent years. The
cost of complying with such regulations is not
always clearly known or determinable since some
of these laws have not yet been promulgated or are
under revision. These costs, along with unforeseen
environmental liabilities, may increase our
operating costs or negatively impact our net worth.

We conduct business in certain countries known
to experience governmental corruption. Although
we are committed to conducting business in a
legal and ethical manner in compliance with
local and international statutory requirements
and standards applicable to our business, there
is a risk that our employees or representatives
may take actions that violate applicable laws and

regulations that generally prohibit the making
of improper payments to foreign government
officials for the purpose of obtaining or keeping
business, including laws relating to the 1997
OECD Convention on Combating Bribery of
Foreign Public Officials in International Business
Transactions such as the U.S. Foreign Corrupt
Practices Act, or FCPA. Particularly in respect of
FCPA, in May 2011, we entered into settlements
with the U.S. Department of Justice, or DOJ, and
the U.S. Securities and Exchange Commission,
or SEC, and we undertook several remediation
efforts, including voluntary enhancements to our
compliance program. Our obligations under these
settlements expired in May, 2013.

As a holding company, our ability to pay expenses,
debt service and cash dividends depends on the
results of operations and financial condition of
our subsidiaries, which could be restricted by
legal, contractual or other limitations, including
exchange controls or transfer restrictions,
and other agreements and commitments of
our subsidiaries.

The Company’s controlling shareholder may be
able to take actions that do not reflect the will or
best interests of other shareholders.

Our financial risk management is described in
Section III. Financial Risk Management, and our
provisions and contingent liabilities are described
in accounting policy P and notes 23, 24 and 26
of our audited consolidated financial statements
included in this annual report.

19.

t
r
o
p
e
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a
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Operating and financial
review and prospects

The following discussion and analysis of our
financial condition and results of operations are
based on, and should be read in conjunction with,
our audited consolidated financial statements and
the related notes included elsewhere in this annual
report. This discussion and analysis presents our
financial condition and results of operations on a
consolidated basis. We prepare our consolidated
financial statements in conformity with IFRS, as
issued by the IASB and adopted by the E.U.

Certain information contained in this discussion
and analysis and presented elsewhere in this annual
report, including information with respect to
our plans and strategy for our business, includes
forward looking statements that involve risks
and uncertainties. See “Cautionary Statement
Concerning Forward-Looking Statements”. In
evaluating this discussion and analysis, you should
specifically consider the various risk factors
identified in “Principal Risks and Uncertainties”,
other risk factors identified elsewhere in this
annual report and other factors that could cause
results to differ materially from those expressed in
such forward looking statements.

Overview
We are a leading global manufacturer and supplier
of steel pipe products and related services for the
energy industry and other industries.
We are a leading global manufacturer and supplier
of steel pipe products and related services for
the world’s energy industry as well as for other
industrial applications. Our customers include

most of the world’s leading oil and gas companies
as well as engineering companies engaged in
constructing oil and gas gathering and processing
and power facilities. Over the last two decades,
we have expanded our business globally through
a series of strategic investments, and we now
operate an integrated worldwide network of
steel pipe manufacturing, research, finishing and
service facilities with industrial operations in the
Americas, Europe, Asia and Africa and a direct
presence in most major oil and gas markets.

Our main source of revenue is the sale of products
and services to the oil and gas industry, and the level
of such sales is sensitive to international oil and gas
prices and their impact on drilling activities.
Demand for our products and services from the
global oil and gas industry, particularly for tubular
products and services used in drilling operations,
represents a substantial majority of our total sales.
Our sales, therefore, depend on the condition of the
oil and gas industry and our customers’ willingness
to invest capital in oil and gas exploration and
development as well as in associated downstream
processing activities. The level of these expenditures
is sensitive to oil and gas prices as well as the oil and
gas industry’s view of such prices in the future.

A growing proportion of exploration and
production spending by oil and gas companies
has been directed at offshore, deep drilling and
non-conventional drilling operations in which
high-value tubular products, including special
steel grades and premium connections, are usually
specified. Technological advances in drilling

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techniques and materials are opening up new areas
for exploration and development. More complex
drilling conditions are expected to continue to
demand new and high value products and services
in most areas of the world.

In 2013, worldwide drilling activity declined 3%
compared to the level of 2012. In the United
States the rig count in 2013 declined by 8% but
consumption of OCTG was offset by improved
drilling efficiencies. In Canada the rig count
declined by 3% in 2013.

In the rest of the world, the rig count increased 5%
in 2013. During 2013, our sales in the Middle East
and Africa reached a record level led by natural gas
drilling activity in the Middle East and deepwater
projects in sub-Saharan Africa.

Our business is highly competitive.
The global market for steel pipes is highly
competitive, with the primary competitive factors
being price, quality, service and technology. We
sell our products in a large number of countries
worldwide and compete primarily against European
and Japanese producers in most markets outside
North America. In the United States and Canada we
compete against a wide range of local and foreign
producers. Competition in markets worldwide has
been increasing, particularly for products used in

standard applications, as producers in countries like
China and Russia increase production capacity and
enter export markets.

In addition, there is an increased risk of unfairly-
traded steel pipe imports in markets in which we
produce and sell our products. In February 2014,
the U.S. Department of Commerce, or DOC,
imposed preliminary anti-dumping duties on
OCTG imports from various countries; however,
imports from Korea, which are the largest among
the imports under investigation, were not subject
to anti-dumping duties. However, the DOC has
stated that, in its final determination (July 7,
2014), it will consider additional elements that,
in our view, strongly support the case against
Korean imports.

Our production costs are sensitive to prices of
steelmaking raw materials and other steel products.
We purchase substantial quantities of steelmaking
raw materials, including ferrous steel scrap,
direct reduced iron (DRI), pig iron, iron ore and
ferroalloys, for use in the production of our
seamless pipe products. In addition, we purchase
substantial quantities of steel coils and plate for use
in the production of our welded pipe products. Our
production costs, therefore, are sensitive to prices
of steelmaking raw materials and certain steel
products, which reflect supply and demand factors

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in the global steel industry and in the countries
where we have our manufacturing facilities.

The costs of steelmaking raw materials and of steel
coils and plates were relatively stable in 2013 and
overall slightly below the average level for 2012.
We expect these costs to remain stable during 2014.

Outlook
With the economic recovery taking hold, demand
for energy is increasing and, despite higher supply
in North America, oil prices remain at levels
which should continue to support investments in
exploration and production activity during 2014.

In the United States, for 2014, we expect a similar
level of onshore drilling activity and OCTG
consumption but activity should increase in the
Gulf of Mexico. In South America we expect sales
to be affected by continuing project delays in Brazil.
In the Middle East and Africa, for 2014 we expect
sales to remain at a similar level than in 2013.

Despite the negative impact on our sales in the
U.S. market, resulting from the preliminary
anti-dumping ruling made by the DOC, and the
continuing project delays in Brazil, our overall
results for 2014 are expected to be in line with
those for 2013, supported by positive developments
in the rest of the world.

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Results of Operations

Millions of U.S. dollars (except number of shares and per share amounts)

FOR THE YEAR ENDED DECEMBER 31

2013

2012

Selected consolidated income statement data

CONTINUING OPERATIONS

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Other operating income (expenses), net

Operating income

Interest income

Interest expense

Other financial results

Income before equity in earnings of associated companies and income tax

Equity in earnings (losses) of associated companies

Income before income tax

Income tax

Income for the year (1)

INCOME ATTRIBUTABLE TO (1)

Owners of the parent

Non-controlling interests

Income for the year (1)

Depreciation and amortization

Weighted average number of shares outstanding

Basic and diluted earnings per share

Dividends per share (2)

(1) International Accounting Standard No. 1 (“IAS 1”) (revised), requires that income for the year as shown
on the income statement does not exclude non-controlling interests. Earnings per share, however,
continue to be calculated on the basis of income attributable solely to the owners of the parent.

(2) Dividends per share correspond to the dividends proposed or paid in respect of the year.

10,597

(6,457)

4,140

(1,941)

(14)

2,185

(70)

2,156

2,202

(628)

1,574

1,551

1,574

10,834

(6,637)

4,197

(1,884)

2,357

(56)

(28)

2,307

(63)

2,243

(542)

1,702

1,699

1,702

(610)

(568)

1,180,536,830

1.31

0.43

1.44

0.43

Millions of U.S. dollars (except number of shares)

AT DECEMBER 31

Selected consolidated financial position data

Current assets

Property, plant and equipment, net

Other non-current assets

Total assets

Current liabilities

Non-current borrowings

Deferred tax liabilities

Other non-current liabilities

Total liabilities

Capital and reserves attributable to the owners of the parent

Non-controlling interests

Total Equity

Total liabilities and equity

Share capital

Number of shares outstanding

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2013

2012

6,925

4,674

4,332

6,987

4,435

4,537

15,931

15,960

2,120

246

751

344

3,461

12,290

179

12,470

2,829

532

729

370

4,460

11,328

172

11,500

15,931

15,960

1,181

1,180,536,830

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The following table sets forth our operating and
other costs and expenses as a percentage of net
sales for the periods indicated.

Percentage of net sales

FOR THE YEAR ENDED DECEMBER 31

CONTINUING OPERATIONS

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Other operating income (expenses), net

Operating income

Interest income

Interest expense

Other financial results

Income before equity in earnings of associated companies and income tax

Equity in (losses) earnings of associated companies

Income before income tax

Income tax

Income for the year

INCOME ATTRIBUTABLE TO

Owners of the parent

Non-controlling interests

2013

2012

100.0

(60.9)

39.1

(18.3)

(0.1)

20.6

0.3

(0.7)

0.1

20.3

0.4

20.8

(5.9)

14.9

14.6

0.2

(61.3)

38.7

(17.4)

0.4

21.8

0.3

(0.5)

(0.3)

21.3

(0.6)

20.7

(5.0)

15.7

0.0

Fiscal year ended December 31, 2013
Compared to fiscal year ended December 31, 2012

The following table shows our net sales by business
segment for the periods indicated below:

Millions of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

Tubes

Others

Total

2013

93%

100%

10,023

811

10,834

2012

93%

100%

Increase /
(Decrease)

(2%)

(3%)

(2%)

9,812

784

10,597

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Tubes
The following table indicates, for our Tubes
business segment, sales volumes of seamless and
welded pipes for the periods indicated below:

Thousands of tons

FOR THE YEAR ENDED DECEMBER 31

2013

2012

Seamless

Welded

Total

2,612

1,049

3,661

2,676

1,188

3,864

Increase /
(Decrease)

(2%)

(12%)

(5%)

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The following table indicates, for our Tubes business
segment, net sales by geographic region, operating
income and operating income as a percentage of net
sales for the periods indicated below:

Millions of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

2013

2012

NET SALES

North America

South America

Europe

Middle East & Africa

Far East & Oceania

Total net sales

Operating income

Operating income (% of sales)

4,077

2,237

890

2,094

513

9,812

2,097

21.4%

4,954

2,305

1,042

1,247

475

10,023

2,252

22.5%

Increase /
(Decrease)

(18%)

(3%)

(15%)

68%

(2%)

(7%)

Net sales of tubular products and services
decreased 2% to $9,812 million in 2013, compared
to $10,023 million in 2012, as a result of a 5%
decrease in volumes and a 3% increase in average
selling prices, driven by an improvement in the
mix of products that offset the impact of lower
prices in less differentiated products. In North
America, sales decreased due to lower shipments
and lower prices for less differentiated products.
In South America, sales decreased as sales of line
pipe products stopped in the second half of the
year. In Europe, sales declined mainly due to lower
demand for mechanical products. In the Middle
East and Africa, sales increased mainly due to
higher shipments of premium OCTG products
in the Middle East and for sub Saharan Africa

deepwater projects. In the Far East and Oceania,
sales increased slightly due to higher shipments of
OCTG products in China and Indonesia.

Operating income from tubular products and
services decreased 7% to $2,097 million in 2013,
from $2,252 million in 2012. This decrease in
operating income was mainly driven by a 2%
decrease in sales and a lower operating margin
(21.4% in 2013 vs. 22.5% in 2012). Excluding the
non-recurring gain of $49 million recorded in
2012 related to a tax lawsuit collected in Brazil,
the decline in operating margin is explained
by higher depreciation expenses following the
finalization of investments that when available
for use started to be depreciated.

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Others
The following table indicates, for our Others
business segment, net sales, operating income and
operating income as a percentage of net sales for
the periods indicated below:

Millions of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

2013

2012

Net sales

Operating income

Operating income (% of sales)

784

811

105

11.2%

12.9%

Increase /
(Decrease)

(3%)

(16%)

Net sales of other products and services decreased
3% to $784 million in 2013, compared to $811
million in 2012, mainly due to lower sales of
industrial equipment in Brazil, coiled tubing and
pipes for electric conduit in the United States,
partially offset by higher sales of sucker rods.

Operating income from other products and
services decreased 16% to $88 million in 2013,
from $105 million in 2012, reflecting the reduction
in activity levels in our industrial equipment
business in Brazil, which had a negative impact in
operating performance and margins.

Selling, general and administrative expenses, or
SG&A, increased as a percentage of net sales to
18.3% in 2013 compared to 17.4% in 2012, mainly
due to higher selling expenses associated with
higher export sales to the Middle East and Africa.

Other operating income and expenses resulted
in expenses of $14 million in 2013, compared to
income of $44 million in 2012, mainly attributable

to a non-recurring gain of $49 million related to a
successful tax claim in Brazil in 2012.

Financial results amounted to a loss of $29 million
in 2013, compared to a loss of $50 million in 2012.
Net interest expenses amounted to $37 million in
2013, compared to $22 million in 2012. The increase
in interest expenses was due to a higher proportion
of unhedged Argentine peso-denominated debt
(with higher interest rates). This was offset by better
other financial results, (a gain of $9 million in 2013,
compared to a loss of $28 million in 2012), mainly
due to the positive impact of the devaluation of the
Argentine peso against the U.S. dollar during 2013
(32.7%) on our Argentine peso-denominated debt.

Equity in earnings of associated companies
generated a gain of $46 million in 2013, compared
to a loss of $63 million in 2012 (the 2012 loss
was related to an impairment on our investment
in Usiminas). The 2013 gain was mostly derived
from our equity investment in Ternium S.A.
(NYSE:TX).

Income tax charges totalled $628 million in 2013,
equivalent to 29.1% of income before equity in
earnings of associated companies and income
tax, compared to $542 million in 2012, or 23.5%
of income before equity in earnings of associated
companies and income tax. During 2013, the
tax rate was negatively affected mainly by a new
withholding tax on dividends from Argentina and
by the effect of the Argentine peso devaluation on
the tax base used to calculate deferred taxes.

Income attributable to owners of the parent was
$1,551 million, or $1.31 per share ($2.63 per ADS),
in 2013, compared to $1,699 million, or $1.44 per
share ($2.88 per ADS) in 2012.

Income attributable to non-controlling interest
was $23 million in 2013, compared to $2 million in
2012. The increase was mostly due to better results
at our Japanese subsidiary NKKTubes.

Net income decreased 7% during the year, to
$1,574 million in 2013, compared to $1,701 million
in 2012, mainly reflecting lower operating results
and higher taxes, partially offset by higher results
from associated companies and financial results.

Liquidity and Capital Resources
The following table provides certain information
related to our cash generation and changes in our
cash and cash equivalents position for each of the
last two years:

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Millions of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

Net cash provided by operating activities

Net cash used in investing activities

Net cash used in financing activities

Decrease in cash and cash equivalents

Cash and cash equivalents at the beginning of year (excluding overdrafts)

Effect of exchange rate changes

Decrease in cash and cash equivalents

Cash and cash equivalents at the end of year (excluding overdrafts)

Bank overdrafts

Other investments

Borrowings

Net cash / (debt)

2013

2012

2,355

(1,287)

(1,217)

(149)

773

(26)

(149)

598

1,227

(931)

911

1,860

(1,484)

(426)

(49)

815

(49)

773

644

(1,744)

(271)

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Our financing strategy aims at maintaining
adequate financial resources and access to
additional liquidity. During 2013 we generated
$2.4 billion of operating cash flow, our capital
expenditures amounted to $753 million and we paid
dividends amounting to $508 million. During 2013
we reduced our financial liabilities ($931 million at
year end, compared to $1,744 at the beginning) and
increased our financial assets ($1,842 million at year
end, compared to $1,473 million at the beginning),
arriving at the end of the year to a net cash position
of $911 million, compared to a net debt position of
$271 million at the beginning of the year.

We believe that funds from operations, the availability
of liquid financial assets and our access to external
borrowing through the financial markets will be
sufficient to satisfy our working capital needs, to
finance our planned capital spending program, to
service our debt in the foreseeable future and to
address short-term changes in business conditions.

We have a conservative approach to the management
of our liquidity, which consists mainly of cash and
cash equivalents and other current investments,
comprising cash in banks, liquidity funds and highly
liquid short and medium-term securities. These assets
are carried at fair market value, or at historical cost
which approximates fair market value.

At December 31, 2013, liquid financial assets as
a whole (i.e., cash and cash equivalents and other
current investments) were 11.6% of total assets
compared to 9.2% at the end of 2012.

We hold primarily investments in liquidity
funds and variable or fixed-rate securities from
investment grade issuers. We hold our cash and cash
equivalents primarily in U.S. dollars and in major
financial centers. As of December 31, 2013, U.S.
dollar denominated liquid assets represented 76%,
of total liquid financial assets compared to 79% at
the end of 2012.

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Operating activities
Net cash provided by operations during 2013
was $2.4 billion, compared to $1.9 billion during
2012. This 27% increase was mainly attributable
to a reduction in working capital needs. During
2013 working capital decreased $189 million,
while during 2012 it increased $303 million. The
main yearly variations were related to a decline in
inventories and trade receivables during 2013 ($288
million and $130 million respectively), compared
to an increase in inventories and trade receivables
during 2012 ($175 million and $167 million
respectively). For more information on cash flow
disclosures and changes to working capital, see
note 28 “Cash flow disclosures” to our audited
consolidated financial statements included in this
annual report.

Investing activities
Net cash used in investing activities was $1.3 billion
in 2013, compared to $1.5 billion in 2012. With
capital expenditures basically stable, amounting
to $753 million in 2013 compared to $790 million
in 2012, the reduction was mainly due to the lack
of investments in subsidiaries and associated
companies during 2013, while in 2012 we invested
$511 million, mainly for the acquisition of a
participation in Usiminas for a total consideration
of $505 million.

Financing activities
Net cash used in financing activities, including
dividends paid, proceeds and repayments of
borrowings and acquisitions of non-controlling
interests, was $1.2 billion in 2013, compared to
$426 million in 2012.

Dividends paid during 2013 amounted to $508
million, compared to $449 million in 2012.

Investments in non-controlling interest amounted
to $8 million in 2013, compared to $759 million
in 2012, when we acquired the remaining non-
controlling interests in Confab.

Net repayments of borrowings (repayments less
proceeds) totaled $683 million in 2013, compared
to net proceeds from borrowings of $783 million
in 2012, when we took borrowings to finance the
acquisition of our participation in Usiminas and
the remaining non-controlling interests in Confab.

Our total liabilities to total assets ratio was 0.22:1
as of December 31, 2013 compared to 0.28:1 as of
December 31, 2012.

Principal Sources of Funding
During 2013, we funded our operations with
operating cash flows and bank financing. Short-term
bank borrowings were used as needed throughout
the year.

Financial liabilities
During 2013, borrowings decreased by $813
million, to $931 million at December 31, 2013,
from $1,744 million at December 31, 2012.

Borrowings consist mainly of bank loans,
including syndicated loans. As of December 31,
2013 U.S. dollar-denominated borrowings plus
borrowings denominated in other currencies
swapped to the U.S. dollar represented 68%
of total borrowings. Additionally, unhedged
Argentine peso denominated debt represented 26%
of total borrowings as of December 31, 2013.

For further information about our financial debt,
please see note 20 “Borrowings” to our audited
consolidated financial statements included in this
annual report.

2013

2012

913

931

1,686

1,744

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The following table shows the composition of our
financial debt at December 31, 2013 and 2012:

Millions of U.S. dollars

Bank borrowings

Bank overdrafts

Finance lease liabilities

Total borrowings

Our weighted average interest rates before tax
(considering hedge accounting), amounted to 7.5%
at December 31, 2013 and to 2.6% at December 31,
2012. The increase in our weighted average interest
rates is explained by an increase in the proportion
of unhedged, Argentine peso-denominated debt.
This represented 26% of total borrowings as of
December 31, 2013 and 3% as of December 31,
2012. Tenaris estimates that the impact of the
Argentine peso devaluation on the Argentine peso-
denominated debt balance during 2013 represented
a 7.05% reduction in its weighted average interest
rate before tax. This impact is recorded under net
foreign exchange results in Other Financial Results.

The maturity of our financial debt is as follows:

Millions of U.S. dollars

AT DECEMBER 31, 2013

Borrowings

Interests to be accrued

Total

1 year
or less

685

711

1-2
years

107

2-3
years

3-4
years

4-5
years

Over
5 years

–

Total

931

970

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Our current borrowings to total borrowings ratio
increased from 0.69:1 as of December 31, 2012 to
0.74:1 as of December 31, 2013.

Activities” and note 25 “Derivative financial
instruments” to our audited consolidated financial
statements included in this annual report.

For information on our derivative financial
instruments, please see “Quantitative and Qualitative
Disclosure about Market Risk – Accounting for
Derivative Financial Instruments and Hedging

For information regarding the extent to which
borrowings are at fixed rates, please see
“Quantitative and Qualitative Disclosure about
Market Risk”.

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Significant borrowings
Our most significant borrowings as of December 31,
2013 were as follows:

Millions of U.S. dollars

Disbursement date

Borrower

Type

2013

Mainly 2013

January 2012

Tamsa

Siderca

Confab

Bank loans

Syndicated

(**) The main covenants in these loan agreements are limitations on liens and encumbrances, limitations on the sale of certain
assets, restrictions on investments, compliance with financial ratios (i.e., leverage ratio and interest coverage ratio) and
restrictions on amendments.

As of December 31, 2013, Tenaris was in compliance
with all of the financial and other covenants.

Original
& Outstanding

Final Maturity

420

217

193

2014

Mainly 2014

January 2017 (**)

Quantitative and Qualitative
Disclosure about Market Risk

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The multinational nature of our operations and
customer base expose us to a variety of risks,
including the effects of changes in foreign currency
exchange rates, interest rates and commodity
prices. In order to reduce the impact related to
these exposures, management evaluates exposures
on a consolidated basis to take advantage
of natural exposure netting. For the residual
exposures, we may enter into various derivative
transactions in order to reduce potential adverse
effects on our financial performance. Such
derivative transactions are executed in accordance
with internal policies and hedging practices. We do
not enter into derivative financial instruments for

In millions of U.S. dollars

EXPECTED MATURITY DATE

trading or other speculative purposes, other than
non-material investments in structured products.

The following information should be read together
with section 3, “Financial risk management” to
our audited consolidated financial statements
included elsewhere in this annual report.

Debt Structure
The following tables provide a breakdown of our
debt instruments at December 31, 2013 and 2012
which included fixed and variable interest rate
obligations, detailed by maturity date:

AT DECEMBER 31, 2013

2014

2015

2016

2017

2018

Thereafter

Total (1)

NON-CURRENT DEBT

Fixed rate

Floating rate

CURRENT DEBT

Fixed rate

Floating rate

–

616

685

–

101

–

219

616

931

AT DECEMBER 31, 2012

2013

2014

2015

2016

2017

Thereafter

Total (1)

EXPECTED MATURITY DATE

NON-CURRENT DEBT

Fixed rate

Floating rate

CURRENT DEBT

Fixed rate

Floating rate

–

758

453

1,212

223

–

231

155

–

162

–

512

758

453

1,744

(1) As most borrowings are based on short-term fixed rates, or floating rates that approximate market rates, with interest rate

resetting every 3 to 6 months, the fair value of the borrowings approximates its carrying amount and is not disclosed separately.

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The weighted average interest rates before tax
(calculated using the rates set for each instrument
at year end, in its corresponding currency and
considering derivative financial instruments
designated for hedge accounting), amounted to
7.5% at December 31, 2013, compared to 2.6%
at December 31, 2012. The increase in weighted
average interest rates is explained by an increase
in the proportion of unhedged, Argentine peso-
denominated debt. This represented 26% of total
borrowings as of December 31, 2013, versus 3%
as of December 31, 2012. Tenaris estimates that
the impact of the Argentine peso devaluation on
the Argentine peso-denominated debt balance
during 2013 represented a 7.05% reduction on
its weighted average interest rate before tax. This
impact is recorded under net foreign exchange
results in Other Financial Results.

Our financial liabilities (other than trade payables
and derivative financial instruments) consist
mainly of bank loans. As of December 31, 2013
U.S. dollar denominated financial debt plus debt
denominated in other currencies swapped to the
U.S. dollar represented 68% of total financial debt.
For further information about our financial debt,
please see note 20 “Borrowings” to our audited
consolidated financial statements included in this
annual report.

Interest Rate Risk
Fluctuations in market interest rates create a degree
of risk by affecting the amount of our interest
payments. At December 31, 2013, we had variable
interest rate debt of $288 million and fixed rate
debt of $643 million ($616 million of the fixed rate
debt are short-term). This risk is to a great extent
mitigated by our investment portfolio.

In addition, in the past, we have entered into foreign
exchange derivative contracts and/or interest rate
swaps in order to mitigate the exposure to changes
in interest rates, but there were no interest rate
derivatives outstanding at December 31, 2013, nor
at December 31, 2012.

Foreign Exchange Rate Risk
We manufacture and sell our products in a
number of countries throughout the world and
consequently we are exposed to foreign exchange
rate risk. Since the Company’s functional currency
is the U.S. dollar, the purpose of our foreign
currency hedging program is mainly to reduce the
risk caused by changes in the exchange rates of
other currencies against the U.S. dollar.

Most of our revenues are determined or influenced
by the U.S. dollar. In addition, most of our costs

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correspond to steelmaking raw materials and steel
coils and plates, also determined or influenced by
the U.S. dollar. However, outside the United States,
a portion of our expenses is incurred in foreign
currencies (e.g. labor costs). Therefore, when
the U.S. dollar weakens in relation to the foreign
currencies of the countries where we manufacture
our products, the U.S. dollar-reported expenses
increase. In 2013, a 5% weakening of the U.S. dollar
average exchange rate against the currencies of the
countries where we have labor costs would have
decreased operating income by approximately 3%.

Our consolidated exposure to currency fluctuations
is reviewed on a periodic basis. A number of
hedging transactions are performed in order to
achieve an efficient coverage in the absence of
operative or natural hedges. Almost all of these
transactions are forward exchange rate contracts.

Because certain subsidiaries have functional
currencies other than the U.S. dollar, the results
of hedging activities as reported in the income
statement under IFRS may not reflect entirely
management’s assessment of its foreign exchange
risk hedging needs. Also, intercompany balances
between our subsidiaries may generate exchange
rate results to the extent that their functional
currencies differ.

The value of our financial assets and liabilities is
subject to changes arising out of the variation of
foreign currency exchange rates. The following
table provides a breakdown of our main financial
assets and liabilities (including foreign exchange
derivative contracts) that impact our profit and
loss as of December 31, 2013.

All amounts in millions of U.S. dollars

CURRENCY EXPOSURE / FUNCTIONAL CURRENCY

Argentine Peso / U.S. dollar

Euro / U.S. dollar

U.S. dollar / Brazilian real

Long / (Short)
Position

(369)

(138)

(51)

The main relevant exposures as of December 31,
2013 corresponds to Argentine peso-denominated
trade, social and fiscal payables at our Argentine
subsidiaries which functional currency is the
U.S. dollar, and Euro-denominated liabilities at
certain subsidiaries which functional currency is
the U.S. dollar.

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Foreign Currency Derivative Contracts
The fair value of our foreign currency derivative
contracts amounted to $1 million at December
31, 2013 and $4 million at December 31, 2012. For
further detail on our foreign currency derivative
contracts, please see note 25 “Derivative financial
instruments – Foreign exchange derivative contracts
and hedge accounting” to our audited consolidated
financial statements included in this annual report.

Accounting for Derivative Financial Instruments

and Hedging Activities
Derivative financial instruments are classified as
financial assets (or liabilities) at fair value through
profit or loss. Their fair value is calculated using
standard pricing techniques and, as a general rule,
we recognize the full amount related to the change
in its fair value under financial results in the
current period.

We designate for hedge accounting certain
derivatives that hedge risks associated with
recognized assets, liabilities or highly probable
forecast transactions. These instruments are
classified as cash flow hedges. The effective portion
of the fair value of such derivatives is accumulated
in a reserve account in equity. Amounts accumulated
in equity are then recognized in the income
statement in the same period than the offsetting
losses and gains on the hedged item are recorded.
The gain or loss relating to the ineffective portion
is recognized immediately in the income statement.
The fair value of our derivative financial instruments
(assets or liabilities) continues to be reflected on the
consolidated statement of financial position.

At December 31, 2013, the effective portion of
designated cash flow hedges, included in other
reserves in shareholders’ equity amounted to a
gain of $0.1 million.

the prices of these commodities and raw materials.
Although we fix the prices of such raw materials
and commodities for short-term periods, typically
not in excess of one year, in general we do not
hedge this risk. In the past we have occasionally
used commodity derivative instruments to hedge
certain fluctuations in the market prices of raw
material and energy.

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Concentration of credit risk
There is no significant concentration of credit
from customers. No single customer comprised
more than 10% of our net sales in 2013.

Our credit policies related to sales of products
and services are designed to identify customers
with acceptable credit history, and to allow us
to use credit insurance, letters of credit and
other instruments designed to minimize credit
risk whenever deemed necessary. We maintain
allowances for potential credit losses.

Commodity Price Sensitivity
We use commodities and raw materials that
are subject to price volatility caused by supply
conditions, political and economic variables and
other unpredictable factors. As a consequence, we
are exposed to risk resulting from fluctuations in

Recent
developments

Environmental
regulation

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Annual Dividend Proposal
On February 20, 2014 the Company’s board of
directors proposed, for the approval of the annual
general shareholders' meeting to be held on May 7,
2014, the payment of an annual dividend of $0.43
per share ($0.86 per ADS), or approximately $508
million, which includes the interim dividend of
$0.13 per share ($0.26 per ADS) or approximately
$153 million, paid in November 2013. If the
annual dividend is approved by the shareholders,
a dividend of $0.30 per share ($0.60 per ADS),
or approximately $354 million will be paid on
May 22, 2014, with an ex-dividend date of May
19, 2014. Our audited consolidated financial
statements included in this annual report do not
reflect this dividend payable.

We are subject to a wide range of local,
provincial and national laws, regulations,
permit requirements and decrees relating to the
protection of human health and the environment,
including laws and regulations relating to
hazardous materials and radioactive materials and
environmental protection governing air emissions,
water discharges and waste management. Laws
and regulations protecting the environment have
become increasingly complex and more stringent
and expensive to implement in recent years.
International environmental requirements vary.

The ultimate impact of complying with existing
laws and regulations is not always clearly known
or determinable since regulations under some
of these laws have not yet been promulgated
or are undergoing revision. The expenditures
necessary to remain in compliance with these
laws and regulations, including site or other
remediation costs, or costs incurred from potential
environmental liabilities, could have a material
adverse effect on our financial condition and
profitability. While we incur and will continue
to incur expenditures to comply with applicable
laws and regulations, there always remains a risk
that environmental incidents or accidents may
occur that may negatively affect our reputation or
our operations.

Compliance with applicable environmental laws
and regulations is a significant factor in our
business. We have not been subject to any material
penalty for any material environmental violation
in the last five years, and we are not aware of
any current material legal or administrative
proceedings pending against us with respect
to environmental matters which could have an
adverse material impact on our financial condition
or results of operations.

Related party
transactions

Tenaris is a party to several related party
transactions, which include, among others,
purchases and sales of goods (including steel pipes,
flat steel products, steel bars, raw materials, gas
and electricity) and services (including engineering
services and related services) from or to entities
controlled by San Faustin or in which San Faustin
holds significant interests. Material related
party transactions, as explained in Corporate
Governance – Audit Committee, are subject to the
review of the audit committee of the Company’s
board of directors and the requirements of the
Company’s articles of association and Luxembourg
law. For further detail on Tenaris’s related
party transactions, see Note 29 “Related party
transactions” to our audited consolidated financial
statements, included in this annual report.

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Employees

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The following table shows the number of persons
employed by Tenaris:

The number of our employees remained stable
during 2013.

AT DECEMBER 31

Argentina

Mexico

United States

Brazil

Italy

Romania

Canada

Indonesia

Colombia

Japan

Other Countries

Total employees

2013

6,379

5,290

3,449

3,309

2,352

1,637

1,280

711

627

565

1,226

26,825

Approximately 55% of our employees are
unionized. We believe that we enjoy good or
satisfactory relations with our employees and
their unions in each of the countries in which
we have manufacturing facilities, and we have
not experienced any major strikes or other labor
conflicts with a material impact on our operations
over the last five years. In some of the countries
in which we have significant production facilities
(e.g., Argentina and Brazil), significant fluctuations
in exchange rates, together with inflationary
pressures, affect our costs, increase labor demands
and could eventually generate higher levels of
labor conflicts.

At December 31, 2012 and December 31, 2011,
the number of persons employed by Tenaris was
26,673 and 26,980 respectively.

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Corporate governance

The Company’s corporate governance practices
are governed by Luxembourg Law (including,
among others, the law of August 10, 1915 on
commercial companies, the law of January
11, 2008, implementing the European Union’s
transparency directive, and the law of May 24, 2011,
implementing the European Union’s directive on the
exercise of certain shareholders’ rights in general
meetings of listed companies) and the Company’s
articles of association. As a Luxembourg company
listed on the New York Stock Exchange (the NYSE),
the Bolsa Mexicana de Valores, S.A. de C.V. (the
Mexican Stock Exchange), the Bolsa de Comercio
de Buenos Aires (the Buenos Aires Stock Exchange)
and Borsa Italiana S.p.A. (the Italian Stock
Exchange), the Company is required to comply
with some, but not all, of the corporate governance
standards of these exchanges. The Company,
however, believes that its corporate governance
practices meet, in all material respects, the
corporate governance standards that are generally
required for controlled companies by all of the
exchanges on which the Company’s securities trade.

For a summary of the significant ways in which the
Company’s corporate governance practices differ
from the corporate governance standards required
for controlled companies by the exchanges on
which the Company’s shares trade, please visit our
website at http://www.tenaris.com/investors/

Shareholders’ Meetings; Voting Rights;

Election of Directors
Each Share entitles the holder to one vote at
the Company’s general shareholders’ meetings.
Shareholder action by written consent is not
permitted, but proxy voting is permitted. Notices
of general shareholders’ meetings are governed
by the provisions of Luxembourg law. Pursuant
to applicable Luxembourg law, the Company

must give notice of the calling of any general
shareholders’ meeting at least 30 days prior to
the date for which the meeting is being called,
by publishing the relevant convening notice
in the Luxembourg Official Gazette and in a
leading newspaper having general circulation
in Luxembourg and by issuing a press release
informing of the calling of such meeting. If an
extraordinary general shareholders’ meeting is
adjourned for lack of a quorum, a new convening
notice must be published at least 17 days prior
to the date for which the second-call meeting is
being called. In case Shares are listed on a foreign
regulated market, notices of general shareholders’
meetings shall also comply with the requirements
(including as to content and publicity) and follow
the customary practices of such regulated market.

Pursuant to our articles of association, for as long
as the Shares or other securities of the Company
are listed on a regulated market within the
European Union (as they currently are), and unless
as may otherwise be provided by applicable law,
only shareholders holding shares of the Company
as of midnight, central European time, on the day
that is fourteen days prior to the day of any given
general shareholders’ meeting can attend and
vote at such meeting. The board of directors may
determine other conditions that must be satisfied
by shareholders in order to participate in a general
shareholders’ meeting in person or by proxy,
including with respect to deadlines for submitting
supporting documentation to or for the Company.

No attendance quorum is required at ordinary
general shareholders’ meetings, and resolutions may
be adopted by a simple majority vote of the Shares
represented and voted at the meeting. Unless as may
otherwise be provided by applicable Luxembourg
law, an extraordinary general shareholders’ meeting
may not validly deliberate on proposed amendments

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to the Company’s articles of association unless a
quorum of at least 50% of the issued share capital
is represented at the meeting. If a quorum is not
reached, such meeting may be reconvened at a
later date with no quorum requirements by means
of the notification procedures described above.
In both cases, the Luxembourg Companies Law
and the Company’s articles of association require
that any resolution of an extraordinary general
shareholders’ meeting as to amendments to the
Company’s articles of association be adopted
by a two-thirds majority votes of the Shares
represented at the meeting. If a proposed resolution
consists of changing the Company’s nationality
or of increasing the shareholders’ commitments,
the unanimous consent of all shareholders is
required. Directors are elected at ordinary general
shareholders’ meetings.

Cumulative voting is not permitted. The
Company’s articles of association do not provide
for staggered terms and directors are elected for
a maximum of one year and may be reappointed
or removed by the general shareholders’ meeting
at any time, with or without cause, by resolution
passed by a simple majority vote of the Shares
represented and voted at the meeting. In the case
of a vacancy occurring in the Board of Directors,
the remaining directors may temporarily fill such
vacancy with a temporary director appointed by
resolution adopted with the affirmative vote of a
majority of the remaining directors; provided that
the next general shareholder’s meeting shall be
called upon to ratify such appointment. The term
of any such temporary director shall expire at the

end of the term of office of the director whom
such temporary director replaced.

The next Company’s annual general shareholders’
meeting that will consider, among other things,
our audited consolidated financial statements and
annual accounts included in this annual report will
take place in Luxembourg, on Wednesday May 7,
2014 at 9:30 A.M., Luxembourg time.

The rights of the shareholders attending the
meetings are governed by the Luxembourg law
of 24 May 2011 on the exercise of certain rights
of shareholders in general meetings of listed
companies. For a description of the items of
the agenda of the meetings and the procedures
for attending and voting the meetings, please
see the “Notice of the Annual General Meeting
of Shareholders” on the Company’s website at
www.tenaris.com/investors.

Board of Directors
Management of the Company is vested in a
board of directors with the broadest power to act
on behalf of the Company and accomplish or
authorize all acts and transactions of management
and disposal that are within its corporate purpose
and not specifically reserved in the articles of
association or by applicable law to the general
shareholders’ meeting. The Company’s articles
of association provide for a board of directors
consisting of a minimum of three and a maximum
of fifteen directors; however, for as long as the
Company’s shares are listed on at least one stock

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exchange, the minimum number of directors must
be five. The Company’s current board of directors
is composed of ten directors.

The board of directors is required to meet as often
as required by the interests of the Company and
at least four times per year. A majority of the
members of the board of directors in office present
or represented at the board of directors’ meeting
constitutes a quorum, and resolutions may be
adopted by the vote of a majority of the directors
present or represented. In the case of a tie, the
chairman is entitled to cast the deciding vote.

Directors are elected at the annual ordinary general
shareholders’ meeting to serve one-year renewable
terms, as determined by the general shareholders’
meeting. The general shareholders’ meeting also
determines the number of directors that will
constitute the board and their compensation. The
general shareholders’ meeting may dismiss all or
any one member of the board of directors at any
time, with or without cause, by resolution passed by
a simple majority vote, irrespective of the number
of shares represented at the meeting.

Under the Company’s articles of association, until
May 12, 2017, the board of directors is authorized
to increase the issued share capital in whole or in
part from time to time, through issues of shares
within the limits of the authorized share capital
against compensation in cash, compensation in
kind at a price or if shares are issued by way of
incorporation of reserves, at an amount, which
shall not be less than the par value and may include

such issue premium as the board of directors shall
decide. However, under the Company’s articles of
association, the Company’s existing shareholders
shall have a preferential right to subscribe for any
new Shares issued pursuant to the authorization
granted to its board of directors, except in the
following cases (in which cases no preferential
subscription rights shall apply):

•

any issuance of Shares (including, without
limitation, the direct issuance of Shares or upon
the exercise of options, rights convertible into
shares, or similar instruments convertible or
exchangeable into Shares) against a contribution
other than in cash;
any issuance of Shares (including by way of
free Shares or at discount), up to an amount of
1.5% of the issued share capital of the Company,
to directors, officers, agents, employees of the
Company, its direct or indirect subsidiaries, or
its affiliates (collectively, the “Beneficiaries”),
including, without limitation, the direct issuance
of Shares or upon the exercise of options, rights
convertible into Shares, or similar instruments
convertible or exchangeable into Shares, issued
for the purpose of compensation or incentive of
the Beneficiaries or in relation thereto (which the
board of directors shall be authorized to issue
upon such terms and conditions as it deems fit).

Amendment of the Company’s articles of
association requires the approval of shareholders
at an extraordinary shareholders’ meeting with a
two-thirds majority vote of the Shares present or
represented at the meeting.

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The following table sets forth the name of the
Company’s current directors, their respective
positions on the board, their principal occupation,
their years of service as board members and their age.

Name

Position

Principal Occupation

Years as Director

Age at
December 31, 2013

Roberto Bonatti (1)

Carlos Condorelli

Carlos Franck

Roberto Monti

Gianfelice Mario Rocca (1)

Paolo Rocca (1)

Jaime Serra Puche

Alberto Valsecchi

Director

President of San Faustin

Director of Tenaris and Ternium

President of Santa María

Member of the board of directors of Petrobras Energia

Chairman of the board of directors of San Faustin

Chairman and chief executive officer of Tenaris

Chairman of SAI Consultores

Director of Tenaris

Amadeo Vázquez y Vázquez

Director

Director of Gas Natural Ban S.A.

Guillermo Vogel

Director

Vice chairman of Tamsa

(1) Paolo Rocca and Gianfelice Rocca are brothers, and Roberto Bonatti is Paolo and Gianfelice Rocca’s first cousin.

Roberto Bonatti
Mr. Bonatti is a member of the
Company’s board of directors.
He is a grandson of Agostino Rocca,
founder of the Techint group, a
group of companies controlled
by San Faustin. Throughout his
career in the Techint group he has
been involved specifically in the
engineering and construction and
corporate sectors. He was first
employed by the Techint group in
1976, as deputy resident engineer
in Venezuela. In 1984, he became a
director of San Faustin, and since
2001 he has served as its president.
In addition, Mr. Bonatti currently
serves as president of Sadma
Uruguay S.A.. He is also a member
of the board of directors of Ternium.
Mr. Bonatti is an Italian citizen.

Carlos Condorelli
Mr. Condorelli is a member of the
Company’s board of directors. He
served as our chief financial officer
from October 2002 until September
2007. He is also a board member of
Ternium. He began his career within
the Techint group in 1975 as an analyst
in the accounting and administration
department of Siderar S.A.I.C., or
Siderar. He has held several positions
within Tenaris and other Techint
group companies, including finance
and administration director of
Tamsa and president of the board of
directors of Empresa Distribuidora
La Plata S.A., or Edelap, an Argentine
utilities company. Mr. Condorelli is an
Argentine citizen.

Carlos Franck
Mr. Franck is a member of the
Company’s board of directors.
He is president of Santa María
S.A.I.F. and Inverban S.A. and a
member of the board of directors
of Siderca, Techint Financial
Corporation N.V., Techint Holdings
S.à r.l. and Siderar. He has financial
planning and control responsibilities
in subsidiaries of San Faustin. He
serves as treasurer of the board of
the Di Tella University. Mr. Franck
is an Argentine citizen.

Roberto Monti
Mr. Monti is a member of the
Company’s board of directors. He is
a member of the board of directors
of Petrobras Energia. He has served
as the vice president of Exploration
and Production of Repsol YPF and as
chairman and chief executive officer
of YPF. He was also the president of
Dowell, a subsidiary of Schlumberger
and the president of Schlumberger
Wire & Testing division for East
Hemisphere Latin America.
Mr. Monti is an Argentine citizen.

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Gianfelice Mario Rocca
Mr. Rocca is a member of the
Company’s board of directors.
He is a grandson of Agostino Rocca.
He is the chairman of the board of
directors of San Faustin, a member
of the board of directors of Ternium,
the president of the Humanitas
Group and the president of Tenova
S.p.A. In addition, he sits on the
board of directors or executive
committees of several companies,
including Allianz S.p.A., Brembo
and Buzzi Unicem. He is president
of Assolombarda and chairman of
the board of the Italian Institute of
Technology. He is a member of the
Advisory Board of Allianz Group, the
Aspen Institute Executive Committee,
the Trilateral Commission and
the European Advisory Board of
Harvard Business School. Mr. Rocca
is an Italian citizen.

Paolo Rocca
Mr. Rocca is the chairman of the
Company’s board of directors and
our chief executive officer. He is a
grandson of Agostino Rocca. He
is also chairman of the board of
directors of Tamsa. He is also the
chairman of the board of directors
of Ternium, a director and vice
president of San Faustin, and
a director of Techint Financial
Corporation N.V. He is a member
of the Executive Committee of the
World Steel Association. Mr. Rocca
is an Italian citizen.

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Jaime Serra Puche
Mr. Serra Puche is a member of
the Company’s board of directors.
He is the chairman of SAI
Consultores, a Mexican consulting
firm, and a member of the board
of the following listed companies:
The Mexico Fund, Grupo Vitro,
Grupo Modelo and Alpek. Mr.
Serra Puche served as Mexico’s
Undersecretary of Revenue, Secretary
of Trade and Industry, and Secretary
of Finance. He led the negotiation
and implementation of NAFTA.
Mr. Serra Puche is a Mexican citizen.

Alberto Valsecchi
Mr. Valsecchi is a member of the
Company’s board of directors. He
served as our chief operating officer
from February 2004 until July 2007.
He joined the Techint group in 1968
and has held various positions within
Tenaris and other Techint group
companies. He has retired from his
executive positions. He is also a
member of the board of directors
of San Faustin and chairman of the
board of directors of Dalmine, a
position he assumed in May 2008.
Mr. Valsecchi is an Italian citizen.

Amadeo Vázquez y Vázquez
Mr. Vázquez y Vázquez is a member
of the Company’s board of directors.
He is an independent member of the
board of directors of Gas Natural
Ban S.A. He is a member of the
Asociación Empresaria Argentina,
of the Fundación Mediterránea,
and of the Advisory Board of
the Fundación de Investigaciones
Económicas Latinoamericanas.
He served as chief executive officer
of Banco Río de la Plata S.A. until
August 1997 and was also the
chairman of the board of directors
of Telecom Argentina S.A. until
April 2007. Mr. Vázquez y Vázquez
is a Spanish and Argentine citizen.

Guillermo Vogel
Mr. Vogel is a member of the
Company’s board of directors.
He is the vice chairman of Tamsa,
the chairman of Grupo Collado
S.A.B. de C.V, the vice chairman of
Estilo y Vanidad S.A. de C.V. and a
member of the board of directors
of each of Alfa S.A.B. de C.V., the
American Iron and Steel Institute,
the North American Steel Council,
the Universidad Panamericana and
the IPADE. In addition, he is a
member of the board of directors
and the investment committee of
the Corporación Mexicana de
Inversiones de Capital. Mr. Vogel
is a Mexican citizen.

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Messrs. Monti, Serra Puche and Vázquez y Vázquez
qualify as independent directors under the
Company’s articles of association.

such resolution was adopted, such director advised
the board of directors that he or she opposed the
resolution and caused a record of such opposition
to be included in the minutes of the meeting.

Director Liability
Each director must act in the interest of the
Company, and in accordance with applicable
laws, regulations, and the Company’s articles of
association. Directors are also bound by a general
duty of care owed to the Company.

Under Luxembourg law, a director may be liable
to the Company for any damage caused by
management errors, such as wrongful acts committed
during the execution of his or her mandate, and to
the Company, its shareholders and third parties in
the event that the Company, its shareholders or third
parties suffer a loss due to an infringement of either
the Luxembourg law on commercial companies or
the Company’s articles of association.

Under Luxembourg law, any director having a
conflict of interest in respect of a transaction
submitted for approval to the board of directors
may not take part in the deliberations concerning
such transaction and must inform the board of
such conflict and cause a record of his statement
to be included in the minutes of the meeting.
Subject to certain exceptions, transactions in which
any directors may have had an interest conflicting
with that of the Company must be reported at the
next general shareholders’ meeting following any
such transaction.

A director will not be liable for acts committed
pursuant to a board resolution if, notwithstanding
his or her presence at the board meeting at which

Causes of action against directors for damages
may be initiated by the Company upon a resolution
of the general shareholders’ meeting passed by a
simple majority vote, irrespective of the number of
shares represented at the meeting. Causes of action
against directors who misappropriate corporate
assets or commit a breach of trust may be brought
by any shareholder for personal losses different
from those of the Company.

It is customary in Luxembourg that the
shareholders expressly discharge the members
of the board of directors from any liability
arising out of or in connection with the exercise
of their mandate when approving the annual
accounts of the Company at the annual general
shareholders meeting. However, such discharge
will not release the directors from liability for
any damage caused by wrongful acts committed
during the execution of their mandate or due to
an infringement of either the Luxembourg law on
commercial companies or the Company’s articles
of association vis-à-vis third parties.

Audit Committee
Pursuant to the Company’s articles of association,
as supplemented by the audit committee’s charter,
for as long as the Company’s shares are listed on at
least one stock exchange, the Company must have
an audit committee composed of three members,
all of which must qualify as independent directors
under the Company’s articles of association.

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Under the Company’s articles of association, an
independent director is a director who:

•

is not and has not been employed by us or our
subsidiaries in an executive capacity for the
preceding five years;
is not a person that controls us, directly or indirectly,
and is not a member of the board of directors of a
company controlling us, directly or indirectly;
does not have (and is not affiliated with a
company or a firm that has) a significant business
relationship with us, our subsidiaries or our
controlling shareholder;
is not and has not been affiliated with or
employed by a present or former auditor of us, our
subsidiaries or our controlling shareholder for the
preceding five years; and
is not a spouse, parent, sibling or relative up to the
third degree of any of the above persons.

The Company’s board of directors has an audit
committee consisting of three members. On
May 2, 2013, the Company’s board of directors
reappointed Jaime Serra Puche, Amadeo Vázquez
y Vázquez and Roberto Monti as members of our
audit committee. All three members of the audit
committee qualify as independent directors under
the Company’s articles of association.

Under the Company’s articles of association, the
audit committee is required to report to the board of
directors on its activities from time to time, and on
the adequacy of the systems of internal control over

financial reporting once a year at the time the annual
accounts are approved. In addition, the charter of the
audit committee sets forth, among other things, the
audit committee’s purpose and responsibilities. The
audit committee assists the board of directors in its
oversight responsibilities with respect to our financial
statements, and the independence, performance
and fees of our independent auditors. The audit
committee also performs other duties entrusted to it
by the Company’s board of directors.

In addition, the audit committee is required by
the Company’s articles of association to review
“material transactions”, as such term is defined
under the Company’s articles of association, to be
entered into by the Company or its subsidiaries
with “related parties”, as such term is defined in
the Company’s articles of association, in order
to determine whether their terms are consistent
with market conditions or are otherwise fair to the
Company and/or its subsidiaries. In the case of
material transactions entered into by the Company’s
subsidiaries with related parties, the Company’s
audit committee will review those transactions
entered into by those subsidiaries whose boards of
directors do not have independent members.

Under the Company’s articles of association, as
supplemented by the audit committee’s charter, a
material transaction is:

•

any transaction between the Company or its
subsidiaries with related parties (x) with an

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individual value equal to or greater than $10 million,
or (y) with an individual value lower than $10 million,
when the aggregate sum – as reflected in the financial
statements of the four fiscal quarters of the Company
preceding the date of determination- of any series of
transactions for such lower value that can be deemed
to be parts of a unique or single transaction (but
excluding any transactions that were reviewed and
approved by Company’s audit committee or board of
directors, as applicable, or the independent members
of the board of directors of any of its subsidiaries)
exceeds 1.5% of the Company’s consolidated net
sales made in the fiscal year preceding the year on
which the determination is made;
any corporate reorganization transaction
(including a merger, spin-off or bulk transfer of a
business) affecting the Company for the benefit of,
or involving, a related party; and
any corporate reorganization transaction (including
a merger, spin-off or bulk transfer of a business) not
reviewed and approved by the independent members
of the board of directors of any of the Company’s
direct or indirect subsidiaries, affecting any of the
Company’s direct or indirect subsidiaries for the
benefit of, or involving, a related party.

•

The audit committee has the power (to the
maximum extent permitted by applicable laws) to
request that the Company or relevant subsidiary
provide any information necessary for it to
review any material transaction. A related party
transaction shall not be entered into without prior
review by the Company’s audit committee and
approval by the board of directors unless (i) the
circumstances underlying the proposed transaction
justify that it be entered into before it can be
reviewed by the Company’s audit committee or
approved by the board of directors and (ii) the
related party agrees to unwind the transaction
if the Company’s audit committee or board of
directors does not approve it.

The audit committee has the authority to
engage independent counsel and other advisors
to review specific issues as the committee may
deem necessary to carry out its duties and to
conduct any investigation appropriate to fulfill
its responsibilities, and has direct access to the
Company’s internal and external auditors as well
as to the Company’s management and employees
and, subject to applicable laws, its subsidiaries.

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Senior management
Our current senior management as of the date
of this annual report consists of:

Name

Position

Age at
December 31, 2013

Paolo Rocca

Edgardo Carlos

Chairman and Chief Executive Officer

Chief Financial Officer

Gabriel Casanova

Supply Chain Director

Alejandro Lammertyn

Planning Director

Carlos Pappier

Marco Radnic

Marcelo Ramos

Chief Process and Information Officer

Human Resources Director

Technology Director

Vincenzo Crapanzano

Industrial Director

Germán Curá

Sergio de la Maza

Renato Catallini

North American Area Manager

Central American Area Manager

Brazilian Area Manager

Javier Martínez Alvarez

Southern Cone Area Manager

Gabriel Podskubka

Eastern Hemisphere Area Manager

Luca Zanotti

European Area Manager

Gabriel Casanova
Mr. Casanova currently serves as
our supply chain director, with
responsibility for the execution of
all contractual deliveries to
customers. After graduating as a
marine and mechanical engineer, he
joined Siderca’s export department
in 1987. In 1995 he became Siderca’s
Chief Representative in China and
from 1997 to 2009 he held several
positions in the commercial area
in Dalmine. In 2009 he became the
head of our supply chain network
and in October 2012 he assumed his
current position. Mr. Casanova is an
Argentine citizen.

Alejandro Lammertyn
Mr. Lammertyn currently serves as
our planning director, a position
he assumed in April 2013. Mr.
Lammertyn began his career with
Tenaris in 1990. Previously he
served as assistant to the CEO for
marketing, organization and mill
allocation, supply chain director,
commercial director and Eastern
Hemisphere area manager. Mr.
Lammertyn is an Argentine citizen.

Paolo Rocca
Mr. Rocca is the chairman of the
Company’s board of directors and
our chief executive officer. He is
a grandson of Agostino Rocca.
He is also chairman of the board
of directors of Tamsa. He is also
the chairman of the board of
directors of Ternium, a director
and vice president of San Faustin,
and a director of Techint Financial
Corporation N.V. He is a member
of the Executive Committee of the
World Steel Association. Mr. Rocca
is an Italian citizen.

Edgardo Carlos
Mr. Carlos currently serves as our
chief financial officer, a position
that he assumed on July 1, 2013.
He joined the Techint Group in
1987 in the accounting department
of Siderar. After serving as financial
manager for Sidor, in Venezuela,
in 2001 he joined Tenaris as our
financial director. In 2005 he
was appointed administration
and financial manager for North
America and in 2007 he became
administration and financial director
for Central America. In 2009 he was
appointed economic and financial
planning director, until he assumed
his current position. Mr. Carlos is
an Argentine citizen.

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Carlos Pappier
Mr. Pappier currently serves as our
chief process and information officer.
Previously, he served as planning
director. He began his career within
the Techint group in 1984 as a cost
analyst in Siderar. After holding
several positions within Tenaris
and other Techint group companies
in 2002, he became chief of staff
of Tenaris. He assumed his current
position in May 2010. Mr. Pappier
is an Argentine citizen.

Marco Radnic
Mr. Radnic currently serves as
our human resources director. He
began his career within the Techint
group in the Industrial Engineering
Department of Siderar in 1975.
Later he held various positions in
the technical departments of Siderca
and other companies within the
Techint group. After holding several
positions in the marketing and
procurement areas in Europe, in
1996 he became commercial director
of Dalmine. In 1998, he became the
director of our Process and Power
Services business unit. In 2001,
he was appointed chief of staff
for Paolo Rocca in Buenos Aires.
He assumed his current position
in December 2002. Mr. Radnic
is an Argentine citizen.

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Marcelo Ramos
Mr. Ramos currently serves as
our technology director, with
responsibility over technology
and quality. Previously he served
as quality director and managing
director of NKKTubes and our
Japanese operations. He joined the
Techint group in 1987 and has held
various positions within Tenaris
including quality control director
at Siderca. He assumed his current
position in April 2010, when the
quality and technology departments
were combined. Mr. Ramos is an
Argentine citizen.

Vincenzo Crapanzano
Mr. Crapanzano currently serves as
our industrial director, a position he
assumed in April 2011. Previously
he served as our European area
manager, Mexican area manager
and executive vice president of
Tamsa. Prior to joining Tenaris,
he held various positions at Grupo
Falck from 1979 to 1989. When
Dalmine acquired the tubular assets
of Grupo Falck in 1990, he was
appointed managing director of the
cold drawn tubes division. He is also
vice president of Centro Sviluppo
Materiali S.p.A, and of Federacciai.
Mr. Crapanzano is an Italian citizen.

Germán Curá
Mr. Curá currently serves as our
North American area manager.
He is a marine engineer and was
first employed with Siderca in 1988.
Previously, he served as Siderca’s
exports director, Tamsa’s exports
director and commercial director,
sales and marketing manager of
our Middle East office, president
of Algoma Tubes, president and
chief executive officer of Maverick
Tubulars and president and chief
executive officer of Hydril, director
of our Oilfield Services business unit
and Tenaris commercial director. He
was also a member of the board of
directors of the American Petroleum
Institute (API). He assumed his
current position in October 2006.
Mr. Curá is a U.S. citizen.

Sergio de la Maza
Mr. de la Maza currently serves as
our Central American area manager
and also serves as a director and
executive vice-president of Tamsa.
Previously he served as our Mexican
area manager. He first joined
Tamsa in 1980. From 1983 to 1988,
Mr. de la Maza worked in several
positions in Tamsa and Dalmine.
He then became manager of Tamsa’s
new pipe factory and later served as
manufacturing manager and quality
director of Tamsa. Subsequently, he
was named manufacturing director
of Siderca. He assumed his current
position in 2006. Mr. de la Maza
is a Mexican citizen.

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Renato Catallini
Mr. Catallini currently serves as our
Brazilian area manager, a position
that he assumed in October 2012,
after having served as our supply
chain director since August 2007. He
joined Tenaris in 2001 in the supply
management area, as a general
manager of Exiros Argentina. In July
2002, he was appointed operations
director and subsequently, in January
2005, became managing director of
Exiros. Before joining Tenaris, he
worked for ten years in the energy
sector, working for TGN, Nova Gas
Internacional, TransCanada Pipelines
and TotalFinaElf, among others.
Mr. Catallini is an Argentine citizen.

Javier Martínez Alvarez
Mr. Martínez Alvarez currently
serves as our Southern Cone area
manager, a position he assumed
in June 2010, having previously
served as our Andean area manager.
He began his career in the Techint
group in 1990, holding several
positions including planning
manager of Siderar and commercial
director of Ternium-Sidor. In 2006,
he joined Tenaris as our Venezuela
area manager. Mr Martínez Alvarez
is an Argentine citizen.

Gabriel Podskubka
Mr. Podskubka currently serves
as our Eastern Hemisphere area
manager, based in Dubai. He
assumed his current position in
April 2013 after serving as the head
of our operations in Eastern Europe
for 4 years. After graduating as an
industrial engineer Mr. Podskubka
joined the Techint group in 1995
in the marketing department of
Siderca. He held various positions
in the marketing, commercial,
and industrial areas until he was
appointed as oil & gas sales director
in the United States in 2006.
Mr. Podskubka is an Argentine citizen.

Luca Zanotti
Mr. Zanotti currently serves as our
European area manager, a position
he assumed in April 2011. He joined
Tenaris in 2002 as planning and
administration director in Exiros,
the supply management area.
He was later appointed raw
materials director and in July 2007
became managing director of Exiros,
a position he held until June 2010.
In July 2010 he became the senior
assistant to the European area
manager. Before joining Tenaris,
he was a senior manager at A.T.
Kearney in Milan, where he worked
from 1998 to 2002, and prior
to that he held various business
development positions in the Far
East for Lovato Electric. Mr. Zanotti
is an Italian citizen.

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Directors’ and senior management compensation
The compensation of the members of the
Company’s board of directors is determined at the
annual ordinary general shareholders’ meeting.
Each member of the board of directors received
as compensation for their services for the year
2013 a fee of $80,000. The chairman of the audit
committee received as additional compensation
a fee of $60,000 while the other members of
the audit committee received an additional fee
of $50,000. Under the Company’s articles of
association, the members of the audit committee
are not eligible to participate in any incentive
compensation plan for employees of the Company
or any of its subsidiaries.

During the years ended December 31, 2013, 2012
and 2011, the cash compensation of directors and
senior managers amounted to $27.1 million, $24.1
million and $25.7 million respectively. In addition,
directors and senior managers received 534, 542
and 555 thousand units for a total amount of $5.6
million, $5.2 million and $4.9 million, respectively,
in connection with the Employee retention and
long term incentive program described in note
O (2) “Employee benefits –Other long term
benefits” to our audited consolidated financial
statements included in this annual report.

There are no service contracts between any
director and Tenaris that provide for material
benefits upon termination of employment.

Auditors
The Company’s articles of association require
the appointment of an independent audit firm
in accordance with applicable law. The primary
responsibility of the auditor is to audit the

Company’s annual accounts and to submit a
report on the accounts to shareholders at the
annual shareholders’ meeting. In accordance
with applicable law, auditors are chosen from
among the members of the Luxembourg Institute
of Independent Auditors (Institut des réviseurs
d’entreprises). Auditors are appointed by the general
shareholders’ meeting upon recommendation from
our audit committee through a resolution passed by
a simple majority vote, irrespective of the number
of Shares represented at the meeting, to serve one-
year renewable terms. Auditors may be dismissed
by the general shareholders meeting at any time,
with or without cause. Luxembourg law does not
allow directors to serve concurrently as independent
auditors. As part of their duties, the auditors report
directly to the audit committee.

The Company’s audit committee is responsible for,
among other things, the oversight of the Company’s
independent auditors. The audit committee has
adopted in its charter a policy of pre-approval of
audit and permissible non-audit services provided
by its independent auditors. Under the policy,
the audit committee makes its recommendations
to the shareholders’ meeting concerning the
continuing appointment or termination of the
Company’s independent auditors. On a yearly
basis, the audit committee reviews together with
management and the independent auditor, the
audit plan, audit related services and other non-
audit services and approves, ad-referendum of
the general shareholders’ meeting, the related
fees. The general shareholders’ meeting normally
approves such audit fees and authorizes the audit
committee to approve any increase or reallocation
of such audit fees as may be necessary, appropriate
or desirable under the circumstances. The audit
committee delegates to its Chairman the authority

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to consider and approve, on behalf of the audit
committee, additional non-audit services that were
not recognized at the time of engagement, which
must be reported to the other members of the audit
committee at its next meeting. No services outside
the scope of the audit committee’s approval can be
undertaken by the independent auditor.

Our independent auditor for the fiscal year
ended December 31, 2013, appointed by the
shareholders’ meeting held on May 2, 2013, was
PricewaterhouseCoopers Société Coopérative.,
Cabinet de révision agréé in connection with all
of our annual accounts and financial statements.

Audit-Related Fees
Audit-related fees are typically services that are
reasonably related to the performance of the audit
or review of the consolidated financial statements
of the Company and the statutory financial
statements of the Company and its subsidiaries
and are not reported under the audit fee item
above. This item includes fees for attestation
services on financial information of the Company
and its subsidiaries included in their annual reports
that are filed with their respective regulators.

Tax Fees
Fees paid for tax compliance professional services.

Fees Paid to the Company’s Independent Auditor
In 2013, PwC served as the principal external
auditor for the Company. Fees payable to PwC in
2013 are detailed below.

All Other Fees
Fees paid for the support in the development of
training courses.

Thousands of U.S. dollars

FOR THE YEAR ENDED DECEMBER 31

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

Total

2013

5,723

143

117

6,034

Share Ownership
To our knowledge, the total number of Shares (in
the form of ordinary shares or ADSs) beneficially
owned by our directors and senior management
as of February 28, 2014 was 1,397,103, which
represents 0.12% of our outstanding Shares.

The following table provides information
regarding share ownership by our directors and
senior management:

Audit Fees
Audit fees were paid for professional services
rendered by the auditors for the audit of the
consolidated financial statements and internal
control over financial reporting of the Company,
the statutory financial statements of the Company
and its subsidiaries, and any other audit services
required for the SEC or other regulatory filings.

Director or Officer

Guillermo Vogel

Carlos Condorelli

Gabriel Podskubka

Carlos Pappier

Total

Number of
Shares Held

1,325,446

67,211

3,946

500

1,397,103

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Major shareholders
The following table shows the beneficial ownership
of the Shares by (1) the Company’s major
shareholders (persons or entities that have notified
the Company of holdings in excess of 5% of the
Company’s voting rights), (2) non-affiliated public
shareholders, and (3) the Company’s directors and
senior management as a group. The information
below is based on the most recent information
provided to the Company.

Identity of Person or Group

Number

Percent

San Faustin (1)

Aberdeen Asset Management

713,605,187

59,184,400

60.45%

5.01%

PLC’s Fund Management

Operating Subsidiaries (2)

Directors and senior

management as a group

Public

Total

1,397,103

0.12%

406,350,140

34.42%

1,180,536,830

100.00%

(1) San Faustin owns all of its shares in the Company through its wholly-owned subsidiary Techint

Holdings S.à r.l. The Dutch private foundation (Stichting) Rocca & Partners Stichting
Administratiekantoor Aandelen San Faustin ("RP STAK") holds shares in San Faustin sufficient in
number to control San Faustin. No person or group of persons controls RP STAK.

(2) On April 27, 2011, Aberdeen Asset Management PLC's Fund Management Operating Subsidiaries
informed Tenaris, pursuant to the Luxembourg Transparency Law, that as of April 26, 2011, it is
deemed to be the beneficial owner of 59,184,400 ordinary shares of Tenaris, par value U.S.$ 1.00 per
share, representing 5.01% of Tenaris's issued and outstanding capital and votes.

The voting rights of the Company’s major
shareholders do not differ from the voting rights
of other shareholders. None of its outstanding
shares have any special control rights. There are
no restrictions on voting rights, nor are there, to

the Company’s knowledge, any agreements among
shareholders of the Company that might result
in restrictions on the transfer of securities or the
exercise of voting rights.

The Company does not know of any significant
agreements or other arrangements to which the
Company is a party and which take effect, alter
or terminate in the event of a change of control
of the Company. The Company does not know of
any arrangements, the operation of which may at
a subsequent date result in a change of control of
the Company.

Information required under the Luxembourg Law

on takeovers of May 19, 2006
The Company has an authorized share capital of a
single class of 2,500,000,000 shares with a par value
of $ 1.00 per share. Our authorized share capital is
fixed by the Company’s articles of association as
amended from time to time with the approval of
our shareholders in an extraordinary shareholders’
meeting. There were 1,180,536,830 shares issued as of
December 31, 2013. All issued shares are fully paid.

The Company’s articles of association authorize
the board of directors until May 12, 2017, to
increase the issued share capital in whole or in
part from time to time, through issues of shares
within the limits of the authorized share capital
against compensation in cash, compensation
in kind at a price or if shares are issued by way
of incorporation of reserves, at an amount,
which shall not be less than the par value and

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may include such issue premium as the board
of directors shall decide. However, under the
Company’s articles of association, the Company’s
existing shareholders shall have a preferential right
to subscribe for any new Shares issued pursuant to
the authorization granted to its board of directors,
except in the following cases (in which cases no
preferential subscription rights shall apply):

•

any issuance of Shares (including, without
limitation, the direct issuance of Shares or upon
the exercise of options, rights convertible into
shares, or similar instruments convertible or
exchangeable into Shares) against a contribution
other than in cash;
any issuance of Shares (including by way of free
Shares or at discount), up to an amount of 1.5%
of the issued share capital of the Company, to
directors, officers, agents or employees of the
Company, its direct or indirect subsidiaries, or
its affiliates (collectively, the “Beneficiaries”),
including, without limitation, the direct issuance
of Shares or upon the exercise of options, rights
convertible into Shares, or similar instruments
convertible or exchangeable into Shares, issued
for the purpose of compensation or incentive of
the Beneficiaries or in relation thereto (which the
board of directors shall be authorized to issue
upon such terms and conditions as it deems fit).

The Company is controlled by San Faustin, which
owns 60.45% of the Company’s outstanding
shares, through its wholly owned subsidiary Techint
Holdings S.à r.l. The Dutch private foundation
(Stichting) RP STAK holds shares in San Faustin
sufficient in number to control San Faustin. No
person or group of persons controls RP STAK.

Our directors and senior management as a group
own 0.12% of the Company’s outstanding shares,
while the remaining 39.43% are publicly traded.
The Company’s shares trade on the Italian Stock
Exchange, the Buenos Aires Stock Exchange and the
Mexican Stock Exchange; in addition, the Company’s
ADSs trade on the New York Stock Exchange. See
“Corporate Governance – Major Shareholders”.

None of the Company’s outstanding securities has
any special control rights. There are no restrictions
on voting rights, nor are there, to our knowledge,
any agreements among our shareholders that
might result in restrictions on the transfer of
securities or the exercise of voting rights.

The Company’s articles of association do not
contain any redemption or sinking fund provisions,
nor do they impose any restrictions on the transfer
of the Company’s shares.

There are no significant agreements to which the
Company is a party and which take effect, alter or
terminate in the event of a change in the control
of the Company following a takeover bid, thereby

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materially and adversely affecting the Company,
nor are there any agreements between us and
members of our board of directors or employees
that provide for compensation if they resign or
are made redundant without reason, or if their
employment ceases pursuant to a takeover bid.

In addition, under the Company’s articles of
association, the audit committee is required to
report to the board of directors on its activities from
time to time, and on the adequacy of the systems of
internal control over financial reporting once a year
at the time the annual accounts are approved.

Management is vested in a board of directors.
Directors are elected at the annual ordinary
shareholders’ meeting to serve one-year
renewable terms. See “Corporate Governance –
Board of Directors”.

Internal control over financial reporting
Management is responsible for establishing and
maintaining adequate internal control over financial
reporting. Tenaris’s internal control over financial
reporting was designed by management to provide
reasonable assurance regarding the reliability of
financial reporting and the preparation and fair
presentation of its consolidated financial statements
for external purposes in accordance with IFRS.

Because of its inherent limitations, internal
control over financial reporting may not prevent
or detect misstatements or omissions. In addition,
projections of any evaluation of effectiveness to
future periods are subject to the risk that controls
may become inadequate because of changes in
conditions, or that the degree of compliance with
the policies or procedures may deteriorate.

On a yearly basis, management conducts its
assessment of the effectiveness of Tenaris’s
internal control over financial reporting based on
the framework in Internal Control- Integrated
Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission.

Management
certification

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We confirm, to the best of our knowledge, that:

the consolidated financial statements prepared in conformity with International
Financial Reporting Standards, included in this annual report, give a true and fair view
of the assets, liabilities, financial position and profit or loss of Tenaris S.A. and its
consolidated subsidiaries, taken as a whole;

the annual accounts prepared in accordance with Luxembourg legal and regulatory
requirements, included in this annual report, give a true and fair view of the assets,
liabilities, financial position and profit or loss of Tenaris S.A.; and

the consolidated management report, which has been combined with the management
report for Tenaris S.A., included in this annual report, gives a fair review of the
development and performance of the business and the position of Tenaris S.A., or
Tenaris S.A. and its consolidated subsidiaries, taken as a whole, as applicable, together
with a description of the principal risks and uncertainties they face.

Chief Executive Officer
Paolo Rocca
March 28, 2014

Chief Financial Officer
Edgardo Carlos
March 28, 2014

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Tenaris S.A.
Consolidated
financial statements

For the years ended December 31, 2013, 2012 and 2011

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Audit report

To the Shareholders

of Tenaris S.A.

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Report on the consolidated financial statements
We have audited the accompanying consolidated financial statements of Tenaris S.A.
and its subsidiaries, which comprise the consolidated statement of financial position
as at December 31, 2013, and the consolidated income statement, the consolidated
statement of comprehensive income, the consolidated statement of changes in equity
and the consolidated statement of cash flows for the year then ended and a summary
of significant accounting policies and other explanatory information.

Board of Directors’ responsibility for the consolidated financial statements
The Board of Directors is responsible for the preparation and fair presentation of
these consolidated financial statements in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board and
in accordance with International Financial Reporting Standards as adopted by the
European Union, and for such internal control as the Board of Directors determines is
necessary to enable the preparation of consolidated financial statements that are free
from material misstatement, whether due to fraud or error.

Responsibility of the “Réviseur d’entreprises agréé”
Our responsibility is to express an opinion on these consolidated financial statements
based on our audit. We conducted our audit in accordance with International
Standards on Auditing as adopted for Luxembourg by the “Commission de
Surveillance du Secteur Financier”. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material
misstatement. An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the consolidated financial statements. The
procedures selected depend on the judgment of the “Réviseur d’entreprises agréé”
including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments,
the “Réviseur d’entreprises agréé” considers internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and

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the reasonableness of accounting estimates made by the Board of Directors, as well as
evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.

Opinion
In our opinion, these consolidated financial statements give a true and fair view of the
consolidated financial position of Tenaris S.A. and its subsidiaries as of December 31,
2013, and of its consolidated financial performance and its consolidated cash flows for
the year then ended in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board and in accordance with
International Financial Reporting Standards as adopted by the European Union.

Report on other legal and regulatory requirements
The management report, including the corporate governance statement, which is the
responsibility of the Board of Directors, is consistent with the consolidated financial
statements and includes the information required by the law with respect to the
corporate governance statement.

Luxembourg,
March 28, 2014

PricewaterhouseCoopers, Société coopérative
Represented by

Fabrice Goffin

PricewaterhouseCoopers, Société coopérative, 400 Route d’Esch, B.P. 1443, L-1014 Luxembourg
T: +352 494848 1, F: +352 494848 2900, www.pwc.lu

Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256)
R.C.S. Luxembourg B 65 477 - TVA LU25482518

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Consolidated Income Statement

All amounts in thousands of U.S. dollars, unless otherwise stated

YEAR ENDED DECEMBER 31

Notes

2013

2012

Revised

2011

Revised

CONTINUING OPERATIONS

Net sales

Cost of sales

Gross profit

Selling, general and administrative expenses

Other operating income

Other operating expenses

Operating income

Interest income

Interest expense

Other financial results

Income before equity in earnings of associated companies and income tax

Equity in earnings (losses) of associated companies

Income before income tax

Income tax

Income for the year

ATTRIBUTABLE TO

Owners of the parent

Non-controlling interests

10,596,781

10,834,030

9,972,478

(6,456,786)

(6,637,293)

(6,273,407)

4,139,995

4,196,737

3,699,071

(1,941,213)

(1,883,789)

(1,859,240)

14,305

(28,257)

71,380

(27,721)

11,541

(6,491)

2,184,830

2,356,607

1,844,881

33,094

(70,450)

8,677

33,459

(55,507)

(28,056)

30,840

(52,407)

11,268

2,156,151

2,306,503

1,834,582

46,098

(63,206)

61,992

2,202,249

2,243,297

1,896,574

(627,877)

(541,558)

(475,370)

1,574,372

1,701,739

1,421,204

1,551,394

1,699,375

1,331,640

22,978

2,364

89,564

1,574,372

1,701,739

1,421,204

EARNINGS PER SHARE ATTRIBUTABLE TO THE OWNERS

OF THE PARENT DURING THE PERIOD

Weighted average number of ordinary shares (thousands)

1,180,537

CONTINUING OPERATIONS

Basic and diluted earnings per share (U.S. dollars per share)

Basic and diluted earnings per ADS (U.S. dollars per ADS) (*)

(*) Each ADS equals two shares.

The accompanying notes are an integral part of these Consolidated Financial Statements.

1.31

2.63

1.44

2.88

1.13

2.26

Consolidated statement of comprehensive income

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All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Income for the year

ITEMS THAT WILL NOT BE RECLASSIFIED TO PROFIT OR LOSS

Remeasurements of post employment benefit obligations, net of taxes

ITEMS THAT MAY BE SUBSEQUENTLY RECLASSIFIED TO PROFIT OR LOSS

Currency translation adjustment

Changes in the fair value of derivatives held as cash flow hedges and others

Share of other comprehensive income of associates

Currency translation adjustment

Changes in the fair value of derivatives held as cash flow hedges and others

Income tax relating to components of other comprehensive income (*)

Other comprehensive loss for the year, net of tax

Total comprehensive income for the year

ATTRIBUTABLE TO

Owners of the parent

Non-controlling interests

(*) Relates to Cash flow hedges.

The accompanying notes are an integral part of these Consolidated Financial Statements.

2013

2012

Revised

2011

Revised

1,574,372

1,701,739

1,421,204

13,449

(1,941)

2,941

(9,728)

(4,547)

5,631

(87,666)

(108,480)

951

(618)

2,682

478

(83,506)

(70,057)

(19,781)

(325,792)

983

(42,684)

(155)

(2,231)

(107,063)

(369,879)

(116,791)

(389,660)

1,504,315

1,584,948

1,031,544

1,480,572

1,588,447

23,743

(3,499)

991,616

39,928

1,504,315

1,584,948

1,031,544

Consolidated statement of financial position

All amounts in thousands of U.S. dollars

AT DECEMBER 31

Notes

2013

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment, net

Intangible assets, net

Investments in associated companies

Other investments

Deferred tax assets

Receivables

CURRENT ASSETS

Inventories

Receivables and prepayments

Current tax assets

Trade receivables

Available for sale assets

Other investments

Cash and cash equivalents

Total assets

EQUITY

Capital and reserves attributable to owners of the parent

Non-controlling interests

Total equity

LIABILITIES

NON-CURRENT LIABILITIES

Borrowings

Deferred tax liabilities

Other liabilities

Provisions

CURRENT LIABILITIES

Borrowings

Current tax liabilities

Other liabilities

Provisions

Customer advances

Trade payables

Total liabilities

Total equity and liabilities

22 (I)

23 (II)

22 (II)

24 (II)

Contingencies, commitments and restrictions to the distribution of profits are disclosed in Note 26.

The accompanying notes are an integral part of these Consolidated Financial Statements.

2012

Revised

8,972,427

6,987,116

4,434,970

3,199,916

977,011

2,603

215,867

142,060

2,985,805

260,532

175,562

2,070,778

21,572

644,409

828,458

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9,005,498

4,673,767

3,067,236

912,758

2,498

197,159

152,080

2,702,647

220,224

156,191

1,982,979

21,572

1,227,330

614,529

6,925,472

15,930,970

15,959,543

12,290,420

179,446

12,469,866

11,328,031

171,561

11,499,592

1,341,375

246,218

751,105

277,257

66,795

684,717

266,760

250,997

25,715

56,911

834,629

2,119,729

3,461,104

15,930,970

532,407

728,541

302,444

67,185

1,211,785

254,603

318,828

26,958

134,010

883,190

1,630,577

2,829,374

4,459,951

15,959,543

Consolidated statement of changes in equity

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All amounts in thousands of U.S. dollars

ATTRIBUTABLE TO OWNERS OF THE PARENT

Share
Capital (1)

Legal
Reserves

Share
Premium

Currency
Translation
Adjustment

Other
Reserves

Balance at December 31, 2012, revised (*)

1,180,537

118,054

609,733

(316,831)

(314,297)

Income for the year

Currency translation adjustment

Remeasurements of post employment benefit

obligations, net of taxes

Hedge reserve, net of tax

Share of other comprehensive income of associates

Other comprehensive (loss) income for the year

Total comprehensive income for the year

Acquisition of non-controlling interests

Dividends paid in cash

–

(2,247)

–

(87,666)

(89,913)

–

13,449

2,960

2,682

19,091

–

(10,552)

–

Balance at December 31, 2013

1,180,537

118,054

609,733

(406,744)

(305,758)

(*) See section II.A. for changes in presentation due to the application of IAS19R.

(1) The Company has an authorized share capital of a single class of 2.5 billion shares having a nominal value of $1.00 per share.

As of December 31, 2013 there were 1,180,536,830 shares issued. All issued shares are fully paid.

(2) The Distributable Reserve and Retained Earnings calculated according to Luxembourg Law are disclosed in Note 26.

The accompanying notes are an integral part of these Consolidated Financial Statements.

ATTRIBUTABLE TO OWNERS OF THE PARENT

Total

Retained
Earnings (2)

Total

Non-controlling
Interests

10,050,835

11,328,031

171,561

11,499,592

1,551,394

22,978

1,574,372

–

(2,247)

13,449

2,960

(84,984)

(70,822)

306

–

459

–

765

(1,941)

13,449

3,419

(84,984)

(70,057)

1,551,394

1,480,572

23,743

1,504,315

–

(507,631)

(10,552)

(507,631)

2,784

(18,642)

(7,768)

(526,273)

11,094,598

12,290,420

179,446

12,469,866

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Consolidated statement of changes in equity (cont.)

All amounts in thousands of U.S. dollars

ATTRIBUTABLE TO OWNERS OF THE PARENT

Share
Capital (1)

Legal
Reserves

Share
Premium

Currency
Translation
Adjustment

Other
Reserves

Balance at December 31, 2011, revised (*)

1,180,537

118,054

609,733

(210,772)

(40,911)

Income for the year

Currency translation adjustment

Effect of adopting IAS 19R

Hedge reserve, net of tax

Share of other comprehensive income of associates

Other comprehensive loss for the year

Total comprehensive income for the year

Acquisition and increase of non-controlling interests (**)

Dividends paid in cash

–

2,421

–

(108,480)

(106,059)

–

(9,664)

3,925

870

(4,869)

–

(268,517)

–

Balance at December 31, 2012

1,180,537

118,054

609,733

(316,831)

(314,297)

Balance at December 31, 2010

1,180,537

118,054

609,733

108,419

Effect of adopting IAS 19R

–

15,809

(30,618)

Balance at December 31, 2010, revised

1,180,537

118,054

609,733

108,419

(14,809)

Income for the year

Currency translation adjustment

Effect of adopting IAS 19R

Hedge reserve, net of tax

Share of other comprehensive income of associates

Other comprehensive loss for the year

Total comprehensive income for the year

Acquisition and increase of non-controlling interests

Treasury shares held by associated companies

Dividends paid in cash

–

(276,507)

–

(42,684)

(319,191)

–

(19,096)

(1,582)

(155)

(20,833)

(1,930)

(3,339)

–

Balance at December 31, 2011

1,180,537

118,054

609,733

(210,772)

(40,911)

(1) The Company has an authorized share capital of a single class of 2.5 billion shares having a nominal value of $1.00 per share.

As of December 31, 2012 and 2011 there were 1,180,536,830 shares issued. All issued shares are fully paid.

(*) See section II.A. for changes in presentation due to the application of IAS19R.

(**) See Note 27.

The accompanying notes are an integral part of these Consolidated Financial Statements.

ATTRIBUTABLE TO OWNERS OF THE PARENT

Total

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Retained
Earnings

Total

Non-controlling
Interests

8,800,064

10,456,705

666,031

11,122,736

1,699,375

2,364

1,701,739

–

2,421

(9,664)

3,925

(107,610)

(110,928)

1,699,375

1,588,447

(6,968)

(64)

1,088

(5,863)

(3,499)

(4,547)

(9,728)

5,013

(107,529)

(116,791)

1,584,948

–

(448,604)

(268,517)

(448,604)

(490,066)

(905)

(758,583)

(449,509)

10,050,835

11,328,031

171,561

11,499,592

7,869,807

9,902,359

648,221

10,550,580

–

(30,618)

–

(30,618)

7,869,807

9,871,741

648,221

10,519,962

1,331,640

89,564

1,421,204

–

(276,507)

(49,285)

(325,792)

(19,096)

(1,582)

(42,839)

(685)

334

–

(19,781)

(1,248)

(42,839)

–

(340,024)

(49,636)

(389,660)

1,331,640

991,616

39,928

1,031,544

–

(1,930)

(3,339)

577

–

(1,353)

(3,339)

(401,383)

(22,695)

(424,078)

8,800,064

10,456,705

(666,031)

11,122,736

Consolidated statement of cash flows

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All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

CASH FLOWS FROM OPERATING ACTIVITIES

Income for the year

ADJUSTMENTS FOR:

Depreciation and amortization

Income tax accruals less payments

Equity in (earnings) losses of associated companies

Interest accruals less payments, net

Changes in provisions

Changes in working capital

Other, including currency translation adjustment

Net cash provided by operating activities

Notes

2013

2012

Revised

2011

Revised

10 & 11

28 (ii)

28 (iii)

28 (i)

1,574,372

1,701,739

1,421,204

610,054

125,416

(46,098)

(29,723)

(1,800)

188,780

(65,883)

567,654

(160,951)

63,206

(25,305)

(12,437)

(303,012)

29,519

554,345

120,904

(61,992)

(24,880)

(2,443)

(649,640)

(74,194)

2,355,118

1,860,413

1,283,304

CASH FLOWS FROM INVESTING ACTIVITIES

Capital expenditures

Acquisitions of subsidiaries and associated companies

Proceeds from disposal of property, plant and equipment and intangible assets

Increase due to sale of associated company

Dividends received from associated companies

Changes in investments in short terms securities

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid

Dividends paid to non-controlling interest in subsidiaries

Acquisitions of non-controlling interests

Proceeds from borrowings (*)

Repayments of borrowings (*)

Net cash used in financing activities

(Decrease) / Increase in cash and cash equivalents

MOVEMENT IN CASH AND CASH EQUIVALENTS

At the beginning of the year

Effect of exchange rate changes

(Decrease) / Increase in cash and cash equivalents

At December 31

CASH AND CASH EQUIVALENTS

Cash and bank deposits

Bank overdrafts

28 (iv)

10 & 11

(753,498)

–

33,186

–

16,334

(789,731)

(510,825)

8,012

3,140

18,708

(862,658)

(9,418)

6,431

–

17,229

245,448

(582,921)

(213,633)

(1,286,899)

(1,484,329)

(602,968)

(507,631)

(448,604)

(401,383)

(18,642)

(7,768)

(905)

(758,583)

2,460,409

2,054,090

(3,143,241)

(1,271,537)

(22,695)

(16,606)

726,189

(953,413)

(1,216,873)

(425,539)

(667,908)

(148,654)

(49,455)

12,428

772,656

(25,857)

(148,654)

598,145

614,529

(16,384)

598,145

815,032

7,079

(49,455)

820,165

(17,561)

12,428

772,656

815,032

828,458

(55,802)

772,656

823,743

(8,711)

815,032

(*) For 2013, these figures include approximately $2,160 million related to the renewal of short-term local facilities carried

out during the year.

The accompanying notes are an integral part of these Consolidated Financial Statements.

Index to the notes to the
Consolidated financial statements

General Information

IV.

Other notes to the Consolidated financial statements

II.

Accounting policies (“AP”)

Basis of presentation

Group accounting

Segment information

Foreign currency translation

Property, plant and equipment

Intangible assets

Impairment of non financial assets

Other investments

Inventories

Trade and other receivables

Cash and cash equivalents

Equity

Borrowings

Segment information

Cost of sales

Selling, general and administrative expenses

Labor costs (included in Cost of sales and in Selling,

general and administrative expenses)

Other operating items

Financial results

Equity in earnings (losses) of associated companies

Income tax

Dividends distribution

10.

Property, plant and equipment, net

11.

Intangible assets, net

12.

Investments in associated companies

13.

Other investments - non current

14.

Receivables - non current

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Current and Deferred income tax

15.

Inventories

Employee benefits

Provisions

Trade payables

Revenue recognition

Cost of sales and sales expenses

Earnings per share

Financial instruments

III.

Financial risk management

Financial Risk Factors

16.

Receivables and prepayments

17.

Current tax assets and liabilities

18.

Trade receivables

19.

Other investments and Cash and cash equivalents

20.

Borrowings

21.

Deferred income tax

22.

Other liabilities

23.

Non-current allowances and provisions

24.

Current allowances and provisions

25.

Derivative financial instruments

Financial instruments by category

26.

Contingencies, commitments and restrictions

Fair value hierarchy

Fair value estimation

on the distribution of profits

27.

Business combinations, other acquisitions and investments

Accounting for derivative financial instruments

28.

Cash flow disclosures

and hedging activities

29.

Related party transactions

30.

Principal subsidiaries

31.

Nationalization of Venezuelan Subsidiaries

32.

Fees paid to the Company’s principal accountant

33.

Subsequent events

I. General information

II. Accounting policies

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Tenaris S.A. (the “Company”) was established
as a public limited liability company (Societé
Anonyme) under the laws of the Grand-Duchy
of Luxembourg on December 17, 2001. The
Company holds, either directly or indirectly,
controlling interests in various subsidiaries in
the steel pipe manufacturing and distribution
businesses. References in these Consolidated
Financial Statements to “Tenaris” refer to Tenaris
S.A. and its consolidated subsidiaries. A list of
the principal Company’s subsidiaries is included
in Note 30 to these Consolidated Financial
Statements.

The Company’s shares trade on the Buenos Aires
Stock Exchange, the Italian Stock Exchange and
the Mexican Stock Exchange; the Company’s
American Depositary Securities (“ADS”) trade on
the New York Stock Exchange.

These Consolidated Financial Statements were
approved for issuance by the Company’s board
of directors on February 20, 2014.

The principal accounting policies applied in the
preparation of these Consolidated Financial
Statements are set out below. These policies have
been consistently applied to all the years presented,
unless otherwise stated.

A. Basis of presentation
The Consolidated Financial Statements of
Tenaris have been prepared in accordance with
International Financial Reporting Standards
(“IFRS”), as issued by the International
Accounting Standards Board (“IASB”) and
adopted by the European Union, under the
historical cost convention, as modified by the
revaluation of available for sale financial assets
and financial assets and liabilities (including
derivative instruments) at fair value through profit
or loss. The Consolidated Financial Statements
are, unless otherwise noted, presented in
thousands of U.S. dollars (“$”).

Whenever necessary, certain comparative amounts
have been reclassified to conform to changes in
presentation in the current year.

As further described below, as from January 1,
2013, the Company adopted IAS 19 (amended
2011). The effect of these changes in the
recognition and measurement of pension
obligations and other post-employment
obligations was $60.7 million ($77.0 million in
other long term liabilities net of a deferred income
tax of $22.3 million and $6.0 million related to
the adoption of IAS 19 in associated companies)
and $50.2 million ($63.6 million in other long term
liabilities net of a deferred income tax of $18.6
million and $5.2 million related to the adoption of
IAS 19 in associated companies) for 2012 and 2011,
respectively. As of December 31, 2010, the effect
of these changes was a decrease of total equity of

$30.6 million ($36.1 million in other long term
liabilities net of a deferred income tax of $10.9
million and $5.4 million related to the adoption of
IAS 19 in associated companies).

•

The preparation of Consolidated Financial
Statements in conformity with IFRS requires
management to make certain accounting estimates
and assumptions that might affect the reported
amounts of assets and liabilities and the disclosure
of contingent assets and liabilities at the reporting
dates, and the reported amounts of revenues and
expenses during the reporting years. Actual results
may differ from these estimates.

•

1. New and amended standards effective

in 2013 and relevant for Tenaris
IAS 1, “Financial statement presentation”
In June 2011, the IASB issued IAS 1 (amended
2011), “Financial statement presentation”. The
amendment requires entities to separate items
presented in Other comprehensive income into
two groups, based on whether or not they may be
recycled to profit or loss in the future. See impact
of the application in the Consolidated Statement
of Other Comprehensive Income.

IAS 19 (amended 2011), “Employee benefits”
In June 2011, the IASB issued IAS 19 (amended
2011), “Employee benefits”, which makes significant
changes to the recognition and measurement of
defined benefit pension expense and termination
benefits and to the disclosures for all employee
benefits. IAS 19 (amended 2011) was applied
retrospectively, as indicated in the transitional
provisions of such IFRS. These changes are related
to recognizing in other comprehensive income of the
period in which they arise the actuarial gains and
losses arising from past experience adjustments and
changes in actuarial assumptions. Past-service costs
are recognized immediately in the income statement.

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IFRS 10, “Consolidated financial statements”,
IFRS 11, “Joint arrangements” and IFRS 12,
“Disclosure of interests in other entities”
The application of these standards did not
materially affect the Company’s financial condition
or results of operations. Until December 31, 2012,
Tenaris’ investment in Exiros B.V. (“Exiros”) was
presented as an investment in associated companies.
Starting on January 1, 2013, and in connection with
an amendment in the shareholders’ agreement,
the Company applied the provisions of IFRS 11
and began to recognize Exiros’s assets, liabilities,
revenue and expenses in relation to its interest in
the joint operation.

•

IFRS 13, “Fair value measurement”
In May 2011, the IASB issued IFRS 13, “Fair value
measurement”. This standard explains how to
measure fair value and aims to enhance fair value
disclosures. See section IIIC and D.

B. Group accounting

1. Subsidiaries and transactions with

non-controlling interests
Subsidiaries are all entities over which Tenaris
has control. Tenaris controls an entity when it
is exposed to, or has rights to, variable returns
from its involvement with the entity and has the
ability to affect those returns through its power
over the entity. Subsidiaries are fully consolidated
from the date on which control is exercised by the
Company and are no longer consolidated from the
date control ceases.

The purchase method of accounting is used to
account for the acquisition of subsidiaries by
Tenaris. The cost of an acquisition is measured
as the fair value of the assets given, equity
instruments issued and liabilities incurred or

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assumed at the date of exchange. Acquisition-
related costs are expensed as incurred. Identifiable
assets acquired, liabilities and contingent liabilities
assumed in a business combination are measured
initially at their fair values at the acquisition
date. Any non-controlling interest in the acquiree
is measured either at fair value or at the non-
controlling interest’s proportionate share of the
acquiree’s net assets. The excess of the aggregate
of the consideration transferred and the amount
of any non-controlling interest in the acquiree
over the fair value of the identifiable net assets
acquired is recorded as goodwill. If this is less than
the fair value of the net assets of the subsidiary
acquired, the difference is recognized directly in
the Consolidated Income Statement.

Transactions with non-controlling interests that
do not result in a loss of control are accounted as
transactions with equity owners of the Company.
For purchases from non-controlling interests, the
difference between any consideration paid and the
relevant share acquired of the carrying value of net
assets of the subsidiary is recorded in equity. Gains
or losses on disposals to non-controlling interests
are also recorded in equity.

Material inter-company transactions, balances
and unrealized gains (losses) on transactions
between Tenaris subsidiaries have been eliminated
in consolidation. However, since the functional
currency of some subsidiaries is its respective local
currency, some financial gains (losses) arising from
inter-company transactions are generated. These
are included in the Consolidated Income Statement
under Other financial results.

2. Associates
Associates are all entities in which Tenaris has
significant influence but not control, generally
accompanying a shareholding of between 20%

and 50% of the voting rights. Investments in
associates are accounted for by the equity method
of accounting and are initially recognized at cost.
The Company’s investment in associates includes
goodwill identified in acquisition, net of any
accumulated impairment loss.

Unrealized results on transactions between Tenaris
and its associated companies are eliminated to
the extent of Tenaris’s interest in the associated
companies. Unrealized losses are also eliminated
unless the transaction provides evidence of an
impairment indicator of the asset transferred.
Financial statements of associated companies
have been adjusted where necessary to ensure
consistency with IFRS.

The Company’s pro-rata share of earnings in
associates is recorded in the Consolidated Income
Statement under Equity in earnings of associated
companies. The Company’s pro-rata share of
changes in other reserves is recognized in the
Consolidated Statement of Changes in Equity
under Other Reserves.

At December 31, 2013, Tenaris holds 11.46%
of Ternium’s common stock. The following
factors and circumstances evidence that Tenaris
has significant influence (as defined by IAS 28,
“Investments in Associates”) over Ternium, and as
a result the Company’s investment in Ternium has
been accounted for under the equity method:

•

Both the Company and Ternium are under the
indirect common control of San Faustin S.A.;
Four out of the nine members of Ternium’s board
of directors (including Ternium’s chairman) are also
members of the Company’s board of directors;
Under the shareholders agreement by and between
the Company and Techint Holdings S.à r.l, a
wholly owned subsidiary of San Faustin S.A. and

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Ternium’s main shareholder, dated January 9,
2006, Techint Holdings S.à r.l, is required to take
actions within its power to cause (a) one of the
members of Ternium’s board of directors to be
nominated by the Company and (b) any director
nominated by the Company to be only removed
from Ternium’s board of directors pursuant to
previous written instructions of the Company.

a significant or prolonged decline in fair value
below the carrying value.

Tenaris carries its investment in Ternium at its
proportional equity value, with no additional goodwill
or intangible assets recognized. At December 31,
2013, 2012 and 2011, no impairment provisions were
recorded on Tenaris’ investment in Ternium.

The Company’s investment in Ternium is carried at
incorporation cost plus proportional ownership of
Ternium’s earnings and other shareholders’ equity
accounts. Because the exchange of its holdings in
Amazonia and Ylopa for shares in Ternium was
considered to be a transaction between companies
under common control of San Faustin S.A. (formerly
San Faustin N.V.), Tenaris recorded its initial
ownership interest in Ternium at $229.7 million,
the carrying value of the investments exchanged.
This value was $22.6 million less than Tenaris’s
proportional ownership of Ternium’s shareholders’
equity at the transaction date. As a result of this
treatment, Tenaris’s investment in Ternium will not
reflect its proportional ownership of Ternium’s net
equity position. Ternium carried out an initial public
offering (“IPO”) of its shares on February 1, 2006,
listing its ADS on the New York Stock Exchange.

At December 31, 2013, Tenaris holds through
its Brazilian subsidiary Confab Industrial S.A.
(“Confab”), 5.0% of the shares with voting rights
and 2.5% of Usiminas’s total share capital. For the
factors and circumstances that evidence that Tenaris
has significant influence over Usiminas to account it
for under the equity method (as defined by IAS 28,
“Investments in Associates”), see Note 27.

Tenaris reviews investments in associated
companies for impairment whenever events or
changes in circumstances indicate that the asset’s
carrying amount may not be recoverable, such as

Tenaris carries its investment in Usiminas at its
proportional equity value, plus goodwill and
intangible assets recognized. At December 31,
2013 no impairment provision was recorded. At
December 31, 2012, an impairment charge was
recorded on Tenaris’ investment in Usiminas. See
Note 27.

C. Segment information
The Company is organized in one major business
segment, Tubes, which is also the reportable
operating segment.

The Tubes segment includes the production and
sale of both seamless and welded steel tubular
products and related services mainly for the oil
and gas industry, particularly oil country tubular
goods (OCTG) used in drilling operations, and
for other industrial applications with production
processes that consist in the transformation of steel
into tubular products. Business activities included
in this segment are mainly dependent on the oil
and gas industry worldwide, as this industry is a
major consumer of steel pipe products, particularly
OCTG used in drilling activities. Demand for steel
pipe products from the oil and gas industry has
historically been volatile and depends primarily
upon the number of oil and natural gas wells being
drilled, completed and reworked, and the depth and
drilling conditions of these wells. Sales are generally
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a centrally managed global distribution network
and domestic sales made through local subsidiaries.
Corporate general and administrative expenses have
been allocated to the Tubes segment.

Tenaris’s Chief Operating Decision Maker (CEO)
holds monthly meetings with senior management,
in which operating and financial performance
information is reviewed, including financial
information that differs from IFRS principally
as follows:

•

The use of direct cost methodology to calculate
the inventories, while under IFRS it is at full cost,
including absorption of production overheads
and depreciations;
The use of costs based on previously internally
defined cost estimates, while, under IFRS, costs
are calculated at historical cost;
The sales of energy and surplus raw materials
are considered as lower cost of goods sold, while
under IFRS are considered as revenues.
Other timing and no significant differences.

Tenaris groups its geographical information
in five areas: North America, South America,
Europe, Middle East and Africa, and Far East and
Oceania. For purposes of reporting geographical
information, net sales are allocated to geographical
areas based on the customer’s location; allocation
of assets, capital expenditures and associated
depreciations and amortizations are based on the
geographic location of the assets.

D. Foreign currency translation

1. Functional and presentation currency
IAS 21 (revised) defines the functional currency as
the currency of the primary economic environment
in which an entity operates.

The functional and presentation currency of the
Company is the U.S. dollar. The U.S. dollar is the
currency that best reflects the economic substance
of the underlying events and circumstances
relevant to Tenaris global operations.

Starting January 1, 2012, the Company changed
the functional currency of its Mexican, Canadian
and Japanese subsidiaries from their respective
local currencies to the U.S. dollar

Except from the Brazilian and Italian subsidiaries
whose functional currencies are their local
currencies, Tenaris determined that the functional
currency of its other subsidiaries is the U.S. dollar,
based on the following principal considerations:

•

Sales are mainly negotiated, denominated and settled
in U.S. dollars. If priced in a currency other than
the U.S. dollar, the sales price considers exposure to
fluctuation in the exchange rate versus the U.S. dollar;
Prices of their critical raw materials and inputs are
priced and settled in U.S. dollars;
Transaction and operational environment and the
cash flow of these operations have the U.S. dollars
as reference currency.
Significant level of integration of the local
operations within Tenaris’s international global
distribution network.
Net financial assets and liabilities are mainly
received and maintained in U.S. dollars;
The exchange rate of certain legal currencies
has long-been affected by recurring and severe
economic crises.

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2. Transactions in currencies other than the

3. Translation of financial information in

functional currency
Transactions in currencies other than the functional
currency are translated into the functional currency
using the exchange rates prevailing at the date
of the transactions or valuation where items are
re-measured.

At the end of each reporting period: (i) monetary
items denominated in currencies other than the
functional currency are translated using the closing
rates; (ii) non-monetary items that are measured
in terms of historical cost in a currency other
than the functional currency are translated using
the exchange rates prevailing at the date of the
transactions; and (iii) non-monetary items that
are measured at fair value in a currency other than
the functional currency are translated using the
exchange rates prevailing at the date when the fair
value was determined.

Foreign exchange gains and losses resulting from
the settlement of such transactions and from
the translation at year-end exchange rates of
monetary assets and liabilities denominated in
currencies other than the functional currency
are recorded as gains and losses from foreign
exchange and included in “Other financial
results” in the Consolidated Income Statement,
except when deferred in equity as qualifying
cash flow hedges and qualifying net investment
hedges. Translation differences on non-monetary
financial assets and liabilities such as equities
held at fair value through profit or loss are
recognized in profit or loss as part of the “fair
value gain or loss,” while translation differences
on non-monetary financial assets such as equities
classified as available for sale are included in
the “available for sale reserve” in equity. Tenaris
had no such assets or liabilities for any of the
periods presented.

currencies other than the functional currency
Results of operations for subsidiaries whose
functional currencies are not the U.S. dollar
are translated into U.S. dollars at the average
exchange rates for each quarter of the year.
Financial Statement positions are translated at
the end-of-year exchange rates. Translation
differences are recognized in a separate component
of equity as currency translation adjustments.
In the case of a sale or other disposal of any of
such subsidiaries, any accumulated translation
difference would be recognized in income as a
gain or loss from the sale.

E. Property, plant and equipment
Property, plant and equipment are recognized
at historical acquisition or construction cost
less accumulated depreciation and impairment
losses; historical cost includes expenditure that
is directly attributable to the acquisition of the
items. Property, plant and equipment acquired
through acquisitions accounted for as business
combinations have been valued initially at the fair
market value of the assets acquired.

Major overhaul and rebuilding expenditures are
capitalized as property, plant and equipment only
when it is probable that future economic benefits
associated with the item will flow to the group
and the investment enhances the condition of
assets beyond its original condition. The carrying
amount of the replaced part is derecognized.
Ordinary maintenance expenses on manufacturing
properties are recorded as cost of products sold in
the year in which they are incurred.

Borrowing costs that are attributable to the
acquisition or construction of certain capital assets
are capitalized as part of the cost of the asset, in

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accordance with IAS 23(R) (“Borrowing Costs”).
Assets for which borrowing costs are capitalized
are those that require a substantial period of time
to prepare for their intended use.

Depreciation method is reviewed at each year end.
Depreciation is calculated using the straight-line
method to depreciate the cost of each asset to its
residual value over its estimated useful life,
as follows:

Land

Buildings and improvements

Plant and production equipment

Vehicles, furniture and fixtures, and other equipment

No Depreciation

30-50 years

10-40 years

4-10 years

The asset’s residual values and useful lives of
significant plant and production equipment are
reviewed and adjusted, if appropriate, at each
year-end date.

Management’s re-estimation of assets useful lives,
performed in accordance with IAS 16 (“Property
plant and equipment”), did not materially affect
depreciation expenses for 2013.

Tenaris depreciates each significant part of an item
of property, plant and equipment for its different
production facilities that (i) can be properly
identified as an independent component with a
cost that is significant in relation to the total cost
of the item, and (ii) has a useful operating life that
is different from another significant part of that
same item of property, plant and equipment.

F. Intangible assets

1. Goodwill
Goodwill represents the excess of the acquisition
cost over the fair value of Tenaris’s share of net
identifiable assets acquired as part of business
combinations determined mainly by independent
valuations. Goodwill is tested annually for
impairment and carried at cost less accumulated
impairment losses. Impairment losses on goodwill
are not reversed. Goodwill is included on the
Consolidated Statement of Financial Position
under Intangible assets, net.

For the purpose of impairment testing, goodwill is
allocated to a subsidiary or group of subsidiaries that
are expected to benefit from the business combination
which generated the goodwill being tested.

2. Information systems projects
Costs associated with maintaining computer
software programs are generally recognized as an
expense as incurred. However, costs directly related
to the development, acquisition and implementation
of information systems are recognized as intangible
assets if it is probable they have economic benefits
exceeding one year.

Information systems projects recognized as assets
are amortized using the straight-line method over
their useful lives, not exceeding a period of 3 years.
Amortization charges are mainly classified as
Selling, general and administrative expenses in the
Consolidated Income Statement.

3. Licenses, patents, trademarks and

Gains and losses on disposals are determined by
comparing the proceeds with the carrying amount
of assets and are recognized under Other operating
income or Other operating expenses in the
Consolidated Income Statement.

proprietary technology
Licenses, patents, trademarks, and proprietary
technology acquired in a business combination are
initially recognized at fair value at the acquisition
date. Licenses, patents, proprietary technology

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and those trademarks that have a finite useful life
are carried at cost less accumulated amortization.
Amortization is calculated using the straight-line
method to allocate the cost over their estimated
useful lives, and does not exceed a period of 10 years.

The balance of acquired trademarks that have
indefinite useful lives according to external appraisal
amounts to $86.7 million at December 31, 2013 and
2012. Main factors considered in the determination
of the indefinite useful lives, include the years that
they have been in service and their recognition among
customers in the industry.

4. Research and development
Research expenditures as well as development costs
that do not fulfill the criteria for capitalization
are recorded as Cost of sales in the Consolidated
Income Statement as incurred. Research and
development expenditures included in Cost of sales
for the years 2013, 2012 and 2011 totaled $105.6
million, $83.0 million and $83.1 million, respectively.

5. Customer relationships
In accordance with IFRS 3 and IAS 38, Tenaris
has recognized the value of customer relationships
separately from goodwill attributable to the
acquisition of Maverick and Hydril.

Customer relationships acquired in a business
combination are recognized at fair value at the
acquisition date, have a finite useful life and are
carried at cost less accumulated amortization.
Amortization is calculated using the straight line
method over the expected life of approximately
14 years for Maverick and 10 years for Hydril.

G. Impairment of non financial assets
Long-lived assets including identifiable intangible
assets are reviewed for impairment at the lowest

level for which there are separately identifiable
cash flows (cash generating units, or CGU). Most
of the Company’s principal subsidiaries that
constitute a CGU have a single main production
facility and, accordingly, each of such subsidiary
represents the lowest level of asset aggregation that
generates largely independent cash inflows.

Assets that are subject to amortization are
reviewed for impairment whenever events or
changes in circumstances indicate that the carrying
amount may not be recoverable. Intangible assets
with indefinite useful life, including goodwill, are
subject to at least an annual impairment test.

In assessing whether there is any indication that
a CGU may be impaired, external and internal
sources of information are analyzed. Material
facts and circumstances specifically considered in
the analysis usually include the discount rate used
in Tenaris’s cash flow projections and the business
condition in terms of competitive and economic
factors, such as the cost of raw materials, oil
and gas prices, competitive environment, capital
expenditure programs for Tenaris’s customers and
the evolution of the rig count.

An impairment loss is recognized for the amount
by which the asset’s carrying amount exceeds its
recoverable amount. The recoverable amount is
the higher of the asset’s value in use and fair value
less costs to sell. Any impairment loss is allocated
to reduce the carrying amount of the assets of the
CGU in the following order:

(a) first, to reduce the carrying amount of any
goodwill allocated to the CGU; and
(b) then, to the other assets of the unit (group
of units) pro rata on the basis of the carrying
amount of each asset in the unit (group of units),
considering not to reduce the carrying amount of

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the asset below the highest of its fair value less cost
to sell, its value in use or zero.

The value in use of each CGU is determined on
the basis of the present value of net future cash
flows which would be generated by such CGU.
Tenaris uses cash flow projections for a five year
period with a terminal value calculated based on
perpetuity and appropriate discount rates.

For purposes of calculating the fair value less costs
to sell Tenaris uses the estimated value of future
cash flows that a market participant could generate
from the corresponding CGU. Tenaris uses cash
flow projections for a five year period with a
terminal value calculated based on perpetuity and
appropriate discount rates.

Management judgment is required to estimate
discounted future cash flows. Actual cash flows
and values could vary significantly from the
forecasted future cash flows and related values
derived using discounting techniques.

Non-financial assets other than goodwill that
suffered an impairment are reviewed for possible
reversal at each reporting date.

In 2013 and 2012, none of the Company’s CGUs
including long-lived assets with finite useful lives,
were tested for impairment as no impairment
indicators were identified.

H. Other investments
Other investments consist primarily of investments
in financial instruments and time deposits with
a maturity of more than three months at the date
of purchase.

Certain fixed income financial instruments
purchased by the Company since October 1,
2013 have been categorized as available for sale
if designated in this category or not classified in
any of the other categories. The results of these
financial investments are recognized in Financial
Results in the Consolidated Income Statement
using the effective interest method. Unrealized
gains and losses other than impairment and
foreign exchange results are recognized in Other
comprehensive income. On maturity or disposal,
net gain and losses previously deferred in Other
comprehensive income are recognized in Financial
Results in the Consolidated Income Statement.

All other investments in financial instruments and
time deposits are categorized as financial assets
“at fair value through profit or loss” and their
results are recognized in Financial Results in the
Consolidated Income Statement.

Purchases and sales of financial investments are
recognized as of their settlement date.

The fair values of quoted investments are generally
based on current bid prices. If the market for a
financial investment is not active or the securities
are not listed, Tenaris estimates the fair value by
using standard valuation techniques (see Section
III Financial Risk Management).

I. Inventories
Inventories are stated at the lower of cost and net
realizable value. The cost of finished goods and
goods in process is comprised of raw materials,
direct labor and utilities (based on FIFO method)
and other direct costs and related production
overhead costs. It excludes borrowing costs.

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Tenaris estimates net realizable value of inventories
by grouping, where applicable, similar or related
items. Net realizable value is the estimated selling
price in the ordinary course of business, less any
estimated costs of completion and selling expenses.
Goods in transit at year end are valued based on
supplier’s invoice cost.

Tenaris establishes an allowance for obsolete
or slow-moving inventory related to finished
goods, supplies and spare parts. For slow moving
or obsolete finished products, an allowance is
established based on management’s analysis of
product aging. An allowance for obsolete and
slow-moving inventory of supplies and spare parts
is established based on management's analysis
of such items to be used as intended and the
consideration of potential obsolescence due to
technological changes.

J. Trade and other receivables
Trade and other receivables are recognized initially
at fair value, generally the original invoice amount.
Tenaris analyzes its trade receivables on a regular
basis and, when aware of a specific counterparty’s
difficulty or inability to meet its obligations,
impairs any amounts due by means of a charge to
an allowance for doubtful accounts. Additionally,
this allowance is adjusted periodically based on the
aging of receivables.

K. Cash and cash equivalents
Cash and cash equivalents are comprised of cash in
banks, liquidity funds and short-term investments
with a maturity of less than three months at the
date of purchase which are readily convertible to
known amounts of cash. Assets recorded in cash

and cash equivalents are carried at fair market
value or at historical cost which approximates fair
market value.

In the Consolidated Statement of Financial
Position, bank overdrafts are included in
Borrowings in current liabilities.

For the purposes of the Consolidated Statement
of Cash Flows, cash and cash equivalents includes
overdrafts.

L. Equity

1. Equity components
The Consolidated Statement of Changes in Equity
includes:

•

The value of share capital, legal reserve, share
premium and other distributable reserves calculated
in accordance with Luxembourg Law;
The currency translation adjustment, other
reserves, retained earnings and non-controlling
interest calculated in accordance with IFRS.

2. Share capital
The Company has an authorized share capital of a
single class of 2.5 billion shares having a nominal value
of $1.00 per share. Total ordinary shares issued and
outstanding as of December 31, 2013, 2012 and 2011
are 1,180,536,830 with a par value of $1.00 per share
with one vote each. All issued shares are fully paid.

3. Dividends distribution by the Company to

shareholders
Dividends distributions are recorded in the Company’s
financial statements when Company’s shareholders
have the right to receive the payment, or when interim

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dividends are approved by the Board of Directors in
accordance with the by-laws of the Company.

Dividends may be paid by the Company to the extent
that it has distributable retained earnings, calculated
in accordance with Luxembourg law (see Note 26).

M. Borrowings
Borrowings are recognized initially at fair value
net of transaction costs incurred and subsequently
measured at amortized cost.

N. Current and Deferred income tax
The tax expense for the period comprises current
and deferred tax. Tax is recognized in the
Consolidated Income Statement, except for tax
items recognized in the Consolidated Statement
of Other Comprehensive Income.

The current income tax charge is calculated on the
basis of the tax laws enacted or substantively enacted
at the reporting date in the countries where the
Company’s subsidiaries operate and generate taxable
income. Management periodically evaluates positions
taken in tax returns with respect to situations in which
applicable tax regulations are subject to interpretation
and establishes provisions when appropriate.

Deferred income tax is recognized applying the
liability method on temporary differences arising
between the tax bases of assets and liabilities and
their carrying amounts in the financial statements.
The principal temporary differences arise from fair
value adjustments of assets acquired in business
combinations, the effect of currency translation on
fixed assets, depreciation on property, plant and
equipment, valuation of inventories and provisions
for pension plans. Deferred tax assets are also
recognized for net operating loss carry-forwards.

Deferred tax assets and liabilities are measured at
the tax rates that are expected to apply in the time
period when the asset is realized or the liability is
settled, based on tax laws that have been enacted
or substantively enacted at the reporting date.

Deferred tax assets are recognized to the extent
it is probable that future taxable income will be
available against which the temporary differences
can be utilized. At the end of each reporting
period, Tenaris reassesses unrecognized deferred
tax assets. Tenaris recognizes a previously
unrecognized deferred tax asset to the extent that
it has become probable that future taxable income
will allow the deferred tax asset to be recovered.

In September 2013, Argentina enacted a law that
amends its Income tax law. The law includes
a new 10% withholding tax on dividend
distributions made by Argentine companies to
foreign beneficiaries. Accordingly, as of December
31, 2013, the Company recorded an income
tax provision of $39.9 million, for the deferred
tax liability on reserves for future dividends at
Tenaris’s Argentine subsidiaries

O. Employee benefits

1. Post employment benefits
The Company has defined benefit and defined
contribution plans. A defined benefit plan is a
pension plan that defines an amount of pension
benefit that an employee will receive on retirement,
usually dependent on one or more factors such as
age, years of service and compensation.

The Company applied IAS 19 (amended 2011),
“Employee benefits”, as from January 1, 2013.
In accordance with the amended standard, post-
employment benefits are accounted as follows:

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The liability recognized in the statement of financial
position in respect of defined benefit pension plans
is the present value of the defined benefit obligation
at the end of the reporting period less the fair value
of plan assets, if any. The defined benefit obligation
is calculated annually (at year end) by independent
actuaries using the projected unit credit method.
The present value of the defined benefit obligation
is determined by discounting the estimated future
cash outflows using interest rates of high-quality
corporate bonds that are denominated in the
currency in which the benefits will be paid, and that
have terms to maturity approximating to the terms
of the related pension obligation.

Actuarial gains and losses arising from experience
adjustments and changes in actuarial assumptions are
charged or credited to equity in other comprehensive
income in the period in which they arise. Past-service
costs are recognized immediately in income.

For defined benefit plans, net interest income/
expense is calculated based on the surplus or
deficit derived by the difference between the
defined benefit obligations less plan assets. For
defined contribution plans, the Company pays
contributions to publicly or privately administered
pension insurance plans on a mandatory,
contractual or voluntary basis. The Company
has no further payment obligations once the
contributions have been paid. The contributions
are recognized as employee benefit expense when
they are due. Prepaid contributions are recognized
as an asset to the extent that a cash refund or a
reduction in the future payments is available. As
required by IAS 19, comparative figures have been
adjusted to reflect the retrospective application.

Tenaris sponsors funded and unfunded defined
benefit pension plans in certain subsidiaries. The
most significant are:

•

Employees’ service rescission indemnity: the cost
of this obligation is charged to the Consolidated
Income Statement over the expected service lives
of employees. This provision is primarily related
to the liability accrued for employees at Tenaris’s
Italian subsidiary. As from January 1, 2007 as a
consequence of a change in an Italian law, employees
were entitled to make contributions to external
funds, thus, Tenaris’s Italian subsidiary pays every
year the required contribution to the funds with no
further obligation. As a result, the plan changed
from a defined benefit plan to a defined contribution
plan effective from that date, but only limited to the
contributions of 2007 onwards.
Defined benefit employees’ retirement plan for
certain Tenaris’s officers designed to provide post-
retirement and other benefits. This unfunded plan
provides defined benefits based on years of service
and final average salary.
Funded retirement benefit plan held in the US
to employees hired prior a certain date that
considers the final average pay for retirement
benefit calculation. Plan assets consist primarily of
investments in equities and money market funds.
Additionally, an unfunded postretirement health
and life plan that offers limited medical and life
insurance benefits to the retirees, hired before a
certain date.
Funded retirement benefit plans held in Canada for
salary and hourly employees hired prior a certain
date based on years of service and, in the case of
salaried employees, final average salary. Both plans
were replaced for defined contribution plans.

2. Other long term benefits
During 2007, Tenaris launched an employee
retention and long term incentive program (the
“Program”) applicable to certain senior officers
and employees of the Company, who will be
granted a number of Units throughout the
duration of the Program. The value of each

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of these Units is based on Tenaris’ shareholders’
equity (excluding non-controlling interest). Also,
the beneficiaries of the Program are entitled to
receive cash amounts based on (i) the amount
of dividend payments made by Tenaris to its
shareholders, and (ii) the number of Units held by
each beneficiary to the Program. Units vest ratably
over a period of four years and will be redeemed by
the Company ten years after grant date, with the
option of an early redemption at seven years after
grant date. As the cash payment of the benefit is
tied to the book value of the shares, and not to
their market value, Tenaris valued this long-term
incentive program as a long term benefit plan as
classified in IAS 19.

As of December 31, 2013 and 2012, the outstanding
liability corresponding to the Program amounts to
$82.4 million and $68.8 million, respectively. The
total value of the units granted to date under the
program, considering the number of units and the
book value per share as of December 31, 2013 and
2012, is $88.6 million and $71.9 million, respectively.

3. Other compensation obligations
Employee entitlements to annual leave and long-
service leave are accrued as earned.

Compensation to employees in the event of
dismissal is charged to income in the year in which
it becomes payable.

P. Provisions
Tenaris is subject to various claims, lawsuits
and other legal proceedings, including customer
claims, in which a third party is seeking payment
for alleged damages, reimbursement for losses or
indemnity. Tenaris’ potential liability with respect
to such claims, lawsuits and other legal proceedings
cannot be estimated with certainty. Management

periodically reviews the status of each significant
matter and assesses potential financial exposure.
If, as a result of past events, a potential loss from a
claim or proceeding is considered probable and the
amount can be reasonably estimated, a provision
is recorded. Accruals for loss contingencies reflect
a reasonable estimate of the losses to be incurred
based on information available to management as of
the date of preparation of the financial statements,
and take into consideration Tenaris’ litigation and
settlement strategies. These estimates are primarily
constructed with the assistance of legal counsel. As
the scope of liabilities become better defined, there
may be changes in the estimates of future costs which
could have a material adverse effect on its results of
operations, financial condition and cash flows.

If Tenaris expects to be reimbursed for an accrued
expense, as would be the case for an expense or
loss covered under an insurance contract, and
reimbursement is considered virtually certain,
the expected reimbursement is recognized as a
receivable.

Q. Trade payables
Trade payables are recognized initially at fair value,
generally the nominal invoice amount.

R. Revenue recognition
Revenue comprises the fair value of the consideration
received or receivable for the sale of goods and
services in the ordinary course of Tenaris’s activities.
Revenue is shown net of value-added tax, returns,
rebates and discounts and after eliminating sales
within the group.

Tenaris’ products and services are sold based
upon purchase orders, contracts or upon other
persuasive evidence of an arrangement with

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customers, including that the sales price is known
or determinable. Sales are recognized as revenue
upon delivery, when neither continuing managerial
involvement nor effective control over the products
is retained by Tenaris and when collection is
reasonably assured. Delivery is defined by the
transfer of risk and may include delivery to a
storage facility located at one of the Company’s
subsidiaries. For bill and hold transactions revenue
is recognized only to the extent (a) it is highly
probable delivery will be made; (b) the products
have been specifically identified and are ready
for delivery; (c) the sales contract specifically
acknowledges the deferred delivery instructions;
(d) the usual payment terms apply.

The percentage of total sales that were generated
from bill and hold arrangements for products
located in Tenaris’s storage facilities that have not
been shipped to customers amounted to 1.3 %,
2.2% and 1.3% as of December 31, 2013, 2012
and 2011, respectively. The Company has not
experienced any material claims requesting the
cancellation of bill and hold transactions.

Other revenues earned by Tenaris are recognized
on the following basis:

•

Construction contracts (mainly applicable to
Tenaris Brazilian subsidiaries): The revenue
recognition of the contracts follows the IAS 11
guidance, that means ,when the outcome of a
construction contract can be estimated reliably
and it is probable that the contract will be
profitable, contract revenue is recognized over the
period of the contract by reference to the stage of
completion (measured by reference to the contract
costs incurred up to the end of the reporting
period as a percentage of total estimated costs for
each contract).
Interest income: on the effective yield basis.

•

Dividend income from investments in other
companies: when Tenaris’ right to receive payment
is established.

S. Cost of sales and sales expenses
Cost of sales and sales expenses are recognized in
the Consolidated Income Statement on the accrual
basis of accounting.

Commissions, freight and other selling expenses,
including shipping and handling costs, are
recorded in Selling, general and administrative
expenses in the Consolidated Income Statement.

T. Earnings per share
Earnings per share are calculated by dividing the
income attributable to owners of the parent by the
daily weighted average number of common shares
outstanding during the year.

U. Financial instruments
Non derivative financial instruments comprise
investments in financial debt instruments and equity,
time deposits, trade and other receivables, cash and
cash equivalents, borrowings, and trade and other
payables. Tenaris’s non derivative financial instruments
are classified into the following categories:

•

Financial instruments at fair value through
profit and loss: comprise mainly cash and cash
equivalents and investments in certain financial debt
instruments and time deposits held for trading.
Loans and receivables: comprise trade receivables
and other receivables and are measured at
amortized cost using the effective interest rate
method less any impairment.
Available for sale assets: comprise certain fixed
income financial instruments purchased by the

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Company since October 1, 2013 that have been
categorized as available for sale if designated in
this category or not classified in any of the other
categories. It also includes the Company’s interest
in the Venezuelan Companies (see Note 31).
Other financial liabilities: comprise borrowings, trade
and other payables and are measured at amortized
cost using the effective interest rate method.

•

Financial assets and liabilities are recognized and
derecognized on their settlement date.

In accordance with IAS 39 (“Financial Instruments:
Recognition and Measurement”) embedded
derivatives are accounted separately from their host
contracts. The result has been recognized under
“Foreign exchange derivatives contracts results”.

The categorization depends on the nature and
purpose of the financial instrument and is
determined at the time of initial recognition.

Accounting for derivative financial instruments
and hedging activities is included within the
Section III, Financial Risk Management.

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III. Financial risk management

The multinational nature of Tenaris’s operations and
customer base exposes the Company to a variety of
risks, mainly related to market risks (including the
effects of changes in foreign currency exchange rates
and interest rates), credit risk and capital market
risk. In order to manage the volatility related to these
exposures, the management evaluates exposures on
a consolidated basis, taking advantage of logical
exposure netting. The Company or its subsidiaries
may then enter into various derivative transactions
in order to prevent potential adverse impacts on
Tenaris’ financial performance. Such derivative
transactions are executed in accordance with internal
policies and hedging practices. The Company’s
objectives, policies and processes for managing these
risks remained unchanged during 2013.

A. Financial risk factors

I. Capital Market Risk
Tenaris seeks to maintain a low debt to total equity
ratio considering the industry and the markets where
it operates. The year-end ratio of debt to total equity
(where “debt” comprises financial borrowings and
“total equity” is the sum of financial borrowings
and equity) is 0.07 as of December 31, 2013, in
comparison with 0.13 as of December 31, 2012. The
Company does not have to comply with regulatory
capital adequacy requirements as known in the
financial services industry.

II. Foreign exchange risk
Tenaris manufactures and sells its products in a
number of countries throughout the world and

consequently is exposed to foreign exchange rate
risk. Since the Company’s functional currency is
the U.S. dollar the purpose of Tenaris’s foreign
currency hedging program is mainly to reduce the
risk caused by changes in the exchange rates of
other currencies against the U.S. dollar.

Tenaris’s exposure to currency fluctuations is
reviewed on a periodic consolidated basis. A
number of derivative transactions are performed in
order to achieve an efficient coverage in the absence
of operative or natural hedges. Almost all of these
transactions are forward exchange rates contracts
(see Note 25 Derivative financial instruments).

Tenaris does not enter into derivative financial
instruments for trading or other speculative
purposes, other than non-material investments in
structured products.

Because certain subsidiaries have functional
currencies other than the U.S. dollar, the results
of hedging activities, reported in accordance with
IFRS, may not reflect entirely the management’s
assessment of its foreign exchange risk hedging
program. Inter-company balances between Tenaris’s
subsidiaries may generate financial gains (losses) to
the extent that functional currencies differ.

The value of Tenaris’s financial assets and
liabilities is subject to changes arising out of the
variation of foreign currency exchange rates.
The following table provides a breakdown of
Tenaris’s main financial assets and liabilities
(including foreign exchange derivative contracts)

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which impact the Company’s profit and loss as of
December 31, 2013 and 2012:

would have been to a large extent offset by changes
to Tenaris’ net equity position.

All amounts Long / (Short) in thousands of U.S.dollars

AS OF DECEMBER 31

2013

2012

CURRENCY EXPOSURE / FUNCTIONAL CURRENCY

Argentine Peso / U.S. dollar

Euro / U.S. dollar

U.S. dollar / Brazilian Real

(368,985)

(137,599)

(51,321)

(168,816)

(117,370)

(27,269)

The main relevant exposures correspond to:

Argentine Peso / U.S. dollar
As of December 31, 2013 and 2012 consisting
primarily of Argentine Peso-denominated financial,
trade, social and fiscal payables at certain Argentine
subsidiaries which functional currency was the U.S.
dollar. A change of 1% in the ARS/USD exchange
rate would have generated a pre-tax gain / loss of
$3.7 million and $1.7 million as of December 31,
2013 and 2012, respectively.

Euro / U.S. dollar
As of December 31, 2013 and 2012, consisting
primarily of Euro-denominated liabilities at
certain subsidiaries which functional currency
was the U.S. dollar. A change of 1% in the EUR/
USD exchange rate would have generated a pre-tax
gain / loss of $1.4 million and $1.2 million as of
December 31, 2013 and 2012, respectively, which

Considering the balances held as of December
31, 2013 on financial assets and liabilities exposed
to foreign exchange rate fluctuations, Tenaris
estimates that the impact of a simultaneous 1%
favorable / unfavorable movement in the levels of
foreign currencies exchange rates relative to the
U.S. dollar, would be a pre-tax gain / loss of $6.7
million (including a gain / loss of $0.3 million due
to foreign exchange derivative contracts), which
would be partially offset by changes to Tenaris’s
net equity position of $0.8 million. For balances
held as of December 31, 2012, a simultaneous 1%
favorable/unfavorable movement in the foreign
currencies exchange rates relative to the U.S. dollar,
would have generated a pre-tax gain / loss of $4.7
million (including a loss / gain of $10.6 million due
to foreign exchange derivative contracts), which
would have been partially offset by changes to
Tenaris’ net equity position of $0.9 million.

III. Interest rate risk
Tenaris is subject to interest rate risk on its
investment portfolio and its debt. The Company
uses a mix of variable and fixed rate debt in
combination with its investment portfolio strategy.
From time to time, the Company may choose to
enter into foreign exchange derivative contracts
and / or interest rate swaps to mitigate the
exposure to changes in the interest rates.

The following table summarizes the proportions of
variable-rate and fixed-rate debt as of each year end.

AS OF DECEMBER 31

Fixed rate

Variable rate

Total (*)

Amount in
thousands of
U.S. dollars

643,005

287,930

930,935

2013

Percentage

69%

31%

Amount in
thousands of
U.S. dollars

778,774

965,418

1,744,192

2012

Percentage

45%

55%

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(*) As of December 31, 2013 approximately 65% of the total debt balance corresponded to fixed-rate
borrowings where the original period was nonetheless equal to or lesser than 360 days. This
compares to approximately 30% of the total outstanding debt balance as of December 31, 2012.

The Company estimates that, if market interest
rates applicable to Tenaris’s borrowings had been
100 basis points higher, then the additional pre-tax
loss would have been $10.8 million in 2013 and
$10.9 million in 2012.

Tenaris’s exposure to interest risk associated
with its debt is also mitigated by its investment
portfolio. Tenaris estimates that, if interest rates
on the benchmark rates for Tenaris portfolio had
been 100 basis points higher, then the additional
pre-tax gain would have been $3.7 million in 2013
and $5.7 million in 2012, partially offsetting the
net losses to Tenaris’s borrowing costs.

IV. Credit risk
Credit risk arises from cash and cash equivalents,
deposits with banks and financial institutions,
as well as credit exposures to customers,
including outstanding receivables and committed
transactions. The Company also actively monitors
the creditworthiness of its treasury, derivative and
insurance counterparties in order to minimize its
credit risk.

There is no significant concentration of credit risk
from customers. No single customer comprised more
than 10% of Tenaris’s net sales in 2013 and 2012.

Tenaris’s credit policies related to sales of products
and services are designed to identify customers
with acceptable credit history, and to allow Tenaris
to require the use of credit insurance, letters of
credit and other instruments designed to minimize
credit risks whenever deemed necessary. Tenaris
maintains allowances for impairment for potential
credit losses (See Section II J).

As of December 31, 2013 and 2012 trade receivables
amount to $1,983.0 million and $2,070.8 million
respectively. Trade receivables have guarantees
under credit insurance of $537.5 million and $539.3
million, letter of credit and other bank guarantees
of $36.5 million and $100.3 million, and other
guarantees of $55 million and $11.8 million as of
December 31, 2013 and 2012 respectively.

As of December 31, 2013 and 2012 past due
trade receivables amounted to $431.0 million and

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$392.8 million, respectively. Out of those amounts
$147.9 million and $103.4 million are guaranteed
trade receivables while $51.2 million and $29.1
million are included in the allowance for doubtful
accounts. Past due receivable not provisioned
relate to a number of customers for whom there
is no recent history of default. The allowance for
doubtful accounts and the existing guarantees are
sufficient to cover doubtful trade receivables.

V. Counterparty risk
Tenaris has investment guidelines with specific
parameters to limit issuer risk on marketable
securities. Counterparties for derivatives and cash
transactions are limited to high credit quality
financial institutions, normally investment grade.

Approximately 98.1% of Tenaris’s liquid
financial assets correspond to Investment Grade-
rated instruments as of December 31, 2013, in
comparison with approximately 88.7% as of
December 31, 2012.

VI. Liquidity risk
Tenaris financing strategy aims to maintain
adequate financial resources and access to
additional liquidity. During 2013, Tenaris has
counted on cash flows from operations as well as
additional bank financing to fund its transactions.

Management maintains sufficient cash and
marketable securities to finance normal operations
and believes that Tenaris also has appropriate access
to market for short-term working capital needs.

Liquid financial assets as a whole (comprising
cash and cash equivalents and other current
investments) were 11.6 % of total assets at the end
of 2013 compared to 9.2% at the end of 2012.

Tenaris has a conservative approach to the
management of its liquidity, which consists of
cash in banks, liquidity funds and short-term
investments mainly with a maturity of less than
three months at the date of purchase.

Tenaris holds primarily investments in money
market funds and variable or fixed-rate securities
from investment grade issuers. As of December
31, 2013, Tenaris does not have direct exposure to
financial instruments issued by European sovereign
counterparties compared to 2.1 million at the end
of 2012.

Tenaris holds its cash and cash equivalents
primarily in U.S. dollars. As of December 31, 2013
and 2012, U.S. dollar denominated liquid assets
represented approximately 76% and 79% of total
liquid financial assets respectively.

B. Financial instruments by category
Accounting policies for financial instruments have
been applied to the line items below:

DECEMBER 31, 2013

Assets at fair
value through
profit and loss

Loans
and
receivables

Available
for
sale

Total

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ASSETS AS PER STATEMENT OF FINANCIAL POSITION

Derivative financial instruments

9,273

–

Trade receivables

Other receivables

Available for sale assets (See note 31)

Other investments

Cash and cash equivalents

Total

DECEMBER 31, 2013

LIABILITIES AS PER STATEMENT OF FINANCIAL POSITION

Borrowings

Derivative financial instruments

Trade and other payables (*)

Total

(*) The maturity of most of trade payables is less than one year.

–

1,184,448

614,529

1,982,979

105,950

–

21,572

45,380

9,273

1,982,979

105,950

21,572

1,229,828

–

614,529

1,808,250

2,088,929

66,952

3,964,131

Liabilities at
fair value
through profit
and loss

Other
financial
liabilities

Total

–

8,268

–

930,935

–

869,933

930,935

8,268

869,933

8,268

1,800,868

1,809,136

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DECEMBER 31, 2012

Assets at fair
value through
profit and loss

Loans
and
receivables

Available
for
sale

Total

ASSETS AS PER STATEMENT OF FINANCIAL POSITION

Derivative financial instruments

17,852

–

Trade receivables

Other receivables

Available for sale assets

Other investments

Cash and cash equivalents

Total

DECEMBER 31, 2012

LIABILITIES AS PER STATEMENT OF FINANCIAL POSITION

Borrowings

Derivative financial instruments

Trade and other payables (*)

Total

(*) The maturity of most of trade payables is less than one year.

–

647,012

828,458

2,070,778

157,614

–

21,572

–

17,852

2,070,778

157,614

21,572

647,012

828,458

1,493,322

2,228,392

21,572

3,743,286

Liabilities at
fair value
through profit
and loss

Other
financial
liabilities

Total

–

1,744,192

14,031

–

926,764

14,031

926,764

14,031

2,670,956

2,684,987

C. Fair value by hierarchy
IFRS 7 requires for financial instruments that are
measured in the statement of financial position at
fair value, a disclosure of fair value measurements
by level according to the following fair value
measurement hierarchy:

Level 1- Quoted prices (unadjusted) in active
markets for identical assets or liabilities.

Level 2- Inputs other than quoted prices included
within Level 1 that are observable for the asset
or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices).

Level 3- Inputs for the asset or liability that are
not based on observable market data (that is,
unobservable inputs).

The following table presents the assets and
liabilities that are measured at fair value as of
December 31, 2013 and 2012.

DECEMBER 31, 2013

Level 1

Level 2

Level 3 (*)

Total

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ASSETS

Cash and cash equivalents

Other investments

Derivatives financial instruments

Available for sale assets (*)

Total

LIABILITIES

Derivatives financial instruments

Total

614,529

866,382

–

614,529

360,948

2,498

1,229,828

9,273

–

21,572

24,070

9,273

21,572

1,875,202

1,480,911

370,221

–

8,268

–

8,268

DECEMBER 31, 2012

Level 1

Level 2

Level 3 (*)

Total

ASSETS

Cash and cash equivalents

Other investments

Derivatives financial instruments

Available for sale assets (*)

Total

LIABILITIES

Derivatives financial instruments

Total

(*) For further detail regarding Available for sale assets, see Note 31.

828,458

451,152

–

193,257

17,852

–

1,279,610

211,109

–

2,603

–

21,572

24,175

828,458

647,012

17,852

21,572

1,514,894

–

14,031

–

14,031

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The fair value of financial instruments traded in
active markets is based on quoted market prices at
the reporting date. A market is regarded as active
if quoted prices are readily and regularly available
from an exchange, dealer, broker, industry group,
pricing service, or regulatory agency, and those
prices represent actual and regularly occurring
market transactions on an arm’s length basis.
The quoted market price used for financial assets
held by Tenaris is the current bid price. These
instruments are included in Level 1 and comprise
primarily corporate and sovereign debt securities.

The fair value of financial instruments that are not
traded in an active market (such as certain debt
securities, certificates of deposits with original
maturity of more than three months, forward and
interest rate derivative instruments) is determined by
using valuation techniques which maximize the use
of observable market data where available and rely

as little as possible on entity specific estimates. If all
significant inputs required to value an instrument
are observable, the instrument is included in Level
2. Tenaris values its assets and liabilities included
in this level using bid prices, interest rate curves,
broker quotations, current exchange rates, forward
rates and implied volatilities obtained from market
contributors as of the valuation date.

If one or more of the significant inputs are not
based on observable market data, the instruments
are included in Level 3. Tenaris values its assets
and liabilities in this level using observable market
inputs and management assumptions which reflect
the Company’s best estimate on how market
participants would price the asset or liability at
measurement date. Main balances included in this
level correspond to Available for sale assets related
to Tenaris’s interest in Venezuelan companies
under process of nationalization (see Note 31).

The following table presents the changes in Level 3
assets and liabilities:

YEAR ENDED DECEMBER 31

At the beginning of the period

Loss for the year

Currency translation adjustment and others

At the end of the year

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Assets / Liabilities

2013

2012

24,175

24,550

–

(105)

(435)

24,070

24,175

D. Fair value estimation
Financial assets or liabilities classified as assets
at fair value through profit or loss are measured
under the framework established by the IASB
accounting guidance for fair value measurements
and disclosures.

The fair values of quoted investments are generally
based on current bid prices. If the market for
a financial asset is not active or no market is
available, fair values are established using standard
valuation techniques.

For the purpose of estimating the fair value of Cash
and cash equivalents and Other Investments expiring

in less than ninety days from the measurement date,
the Company usually chooses to use the historical
cost because the carrying amount of financial assets
and liabilities with maturities of less than ninety days
approximates to their fair value.

The fair value of all outstanding derivatives is
determined using specific pricing models that
include inputs that are observable in the market or
can be derived from or corroborated by observable
data. The fair value of forward foreign exchange
contracts is calculated as the net present value of
the estimated future cash flows in each currency,
based on observable yield curves, converted into
U.S. dollars at the spot rate of the valuation date.

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Borrowings are comprised primarily of fixed
rate debt and variable rate debt with a short
term portion where interest has already been
fixed. They are classified under other financial
liabilities and measured at their carrying amount.
Tenaris estimates that the fair value of its main
financial liabilities is approximately 100.2% of
its carrying amount including interests accrued in
2013 as compared with 101.1% in 2012. Tenaris
estimates that a change of 100 basis points in the
reference interest rates would have an estimated
impact of approximately 0.3% in the fair value of
borrowings as of December 31, 2013 and 0.1% in
2012. Fair values were calculated using standard
valuation techniques for floating rate instruments
and comparable market rates for discounting flows.

E. Accounting for derivative financial

instruments and hedging activities
Derivative financial instruments are initially
recognized in the statement of financial position
at fair value through profit and loss on each
date a derivative contract is entered into and are
subsequently remeasured at fair value. Specific
tools are used for calculation of each instrument’s

fair value and these tools are tested for consistency
on a monthly basis. Market rates are used for all
pricing operations. These include exchange rates,
deposit rates and other discount rates matching
the nature of each underlying risk.

As a general rule, Tenaris recognizes the full
amount related to the change in fair value of
derivative financial instruments in Financial
results in the Consolidated Income Statement.

Tenaris designates certain derivatives as hedges
of particular risks associated with recognized
assets or liabilities or highly probable forecast
transactions. These transactions (mainly
currency forward contracts on highly probable
forecast transactions) are classified as cash flow
hedges. The effective portion of the fair value
of derivatives that are designated and qualify as
cash flow hedges is recognized in equity. Amounts
accumulated in equity are then recognized in the
income statement in the same period than the
offsetting losses and gains on the hedged item.
The gain or loss relating to the ineffective portion
is recognized immediately in the income statement.
The fair value of Tenaris’s derivative financial

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instruments (assets or liabilities) continues to be
reflected on the statement of financial position.
The full fair value of a hedging derivative is
classified as a current or non current asset or
liability according to its expiry date.

For transactions designated and qualifying for
hedge accounting, Tenaris documents at the
inception of the transaction the relationship
between hedging instruments and hedged items, as
well as its risk management objectives and strategy
for undertaking various hedge transactions. Tenaris
also documents its assessment on an ongoing basis,
of whether the derivatives that are used in hedging
transactions are highly effective in offsetting
changes in the fair value or cash flow of hedged
items. At December 31, 2013 and 2012, the effective
portion of designated cash flow hedges which is
included in Other Reserves in equity amounts to
$0.1 million credit and $2.9 million debit (see Note
25 Derivative financial instruments).

The fair values of various derivative instruments
used for hedging purposes are disclosed in Note 25.
Movements in the hedging reserve included within
Other Reserves in equity are also shown in Note 25.

IV. Other notes to the
Consolidated financial statements

In the notes all amounts are shown in thousands of U.S. dollars, unless otherwise stated.

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1. Segment information
As mentioned in section II. AP – C, the Segment
Information is disclosed as follows:

Reportable operating segments

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2013

MANAGEMENT VIEW

Net sales

Sales of energy, surplus raw materials and others

IFRS - Net Sales

MANAGEMENT VIEW

Operating income

Differences in cost of sales and others

Depreciation and amortization

IFRS - Operating income

Financial income (expense), net

Income before equity in earnings of associated companies and income tax

Equity in earnings of associated companies

Income before income tax

Capital expenditures

Depreciation and amortization

Tubes

Other

Total

9,812,295

–

752,796

31,690

10,565,091

31,690

9,812,295

784,486

10,596,781

2,098,160

(1,855)

711

91,265

(3,337)

(114)

2,189,425

(5,192)

597

2,097,016

87,814

2,184,830

(28,679)

2,156,151

46,098

2,202,249

721,869

589,482

31,629

20,572

753,498

610,054

Transactions between segments, which were eliminated in consolidation, mainly related to sales of
scrap, energy, surplus raw materials and others from the Other segment to the Tubes segment for
$276,388, $345,285 and $266,806 in 2013, 2012 and 2011, respectively.

Net income under Management view amounted to $ 1,495.5 million, while under IFRS amounted
to $ 1,574.4 million. In addition to the amounts reconciled above, the main differences arise from
the impact of functional currencies on financial result, deferred income taxes as well as the result of
investment in associated companies.

103.

t
r
o
p
e
R

a
u
n
n
A

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2012

MANAGEMENT VIEW

Net sales

Sales of energy, surplus raw materials and others

IFRS - Net Sales

MANAGEMENT VIEW

Operating income

Differences in cost of sales and others

Depreciation and amortization

IFRS - Operating income

Financial income (expense), net

Income before equity in earnings of associated companies and income tax

Equity in losses of associated companies

Income before income tax

Capital expenditures

Depreciation and amortization

Tubes

Other

Total

10,022,501

741,074

10,763,575

822

69,633

70,455

10,023,323

810,707

10,834,030

2,198,704

109,385

2,308,089

(58,385)

111,509

(1,147)

(3,459)

(59,532)

108,050

2,251,828

104,779

2,356,607

(50,104)

2,306,503

(63,206)

2,243,297

771,734

549,130

17,997

18,524

789,731

567,654

YEAR ENDED DECEMBER 31, 2011

Tubes

Other

Total

IFRS

NET SALES

OPERATING INCOME

Financial income (expense), net

Income before equity in earnings of associated companies and income tax

Equity in earnings of associated companies

Income before income tax

Capital expenditures

Depreciation and amortization

9,111,691

1,702,188

860,787

142,693

9,972,478

1,844,881

(10,299)

1,834,582

61,992

1,896,574

849,362

538,921

13,296

15,424

862,658

554,345

104.

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i
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a
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Geographical information

All amounts in thousands of U.S. dollars

North

America

South

America

Europe

Middle East
& Africa

Far East &
Oceania

Unallocated
(*)

Total

YEAR ENDED DECEMBER 31, 2013

Net sales

Total assets

Trade receivables

Property, plant and

equipment, net

Capital expenditures

Depreciation and amortization

YEAR ENDED DECEMBER 31, 2012

Net sales

Total assets

Trade receivables

Property, plant and

equipment, net

Capital expenditures

Depreciation and amortization

YEAR ENDED DECEMBER 31, 2011

Net sales

Total assets

Trade receivables

Property, plant and

equipment, net

Capital expenditures

Depreciation and amortization

958,178

2,119,896

4,412,263

8,130,799

613,735

2,586,496

3,150,000

506,044

2,561,557

364,806

2,292,811

1,098,733

1,059,887

285,413

327,344

283,265

110,496

151,550

140,180

5,270,062

7,780,873

528,443

2,717,234

3,824,931

867,223

2,222,906

1,003,871

338,827

316,158

237,456

103,537

4,350,815

7,226,605

518,272

2,051,826

496,021

294,602

2,564,518

3,373,855

545,336

892,572

150,419

113,729

1,092,642

2,327,901

273,824

985,617

185,354

116,771

1,119,887

2,396,443

320,075

882,185

176,861

117,360

562,206

373,844

59,196

5,048

10,594

1,271,585

449,056

286,212

64,632

9,720

7,989

1,349,334

522,926

377,569

64,450

22,669

2,495

519,948

592,065

124,550

163,140

28,222

21,440

482,507

578,199

115,076

157,944

18,374

23,199

587,924

651,986

139,339

162,620

16,688

26,159

–

10,596,781

934,343

15,930,970

–

1,982,979

4,673,767

753,498

610,054

–

10,834,030

998,583

15,959,543

–

2,070,778

4,434,970

789,731

567,654

–

9,972,478

691,820

14,863,635

–

1,900,591

4,053,653

862,658

554,345

There are no revenues from external customers attributable to the Company’s country of
incorporation (Luxembourg). For geographical information purposes, “North America” comprises
Canada, Mexico and the USA; “South America” comprises principally Argentina, Brazil,
Colombia, Ecuador and Venezuela; “Europe” comprises principally Italy, Norway, Romania;
“Middle East and Africa” comprises principally Angola, Iraq, Nigeria, Saudi Arabia, United Arab
Emirates and; “Far East and Oceania” comprises principally China, Indonesia and Japan.

(*) Includes Investments in associated companies and Available for sale assets for $21.6 million in

2013, 2012 and 2011 (see Note 12 and 31).

2. Cost of sales

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

2013

2012

2011

105.

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o
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a
u
n
n
A

INVENTORIES AT THE BEGINNING OF THE YEAR

2,985,805

2,806,409

2,460,384

PLUS: CHARGES OF THE PERIOD

Raw materials, energy, consumables and other

Increase in inventory due to business combinations

Services and fees

Labor cost

Depreciation of property, plant and equipment

Amortization of intangible assets

Maintenance expenses

Allowance for obsolescence

Taxes

Other

LESS: INVENTORIES AT THE END OF THE YEAR

3,749,921

4,330,547

4,409,698

–

422,142

1,486

433,944

10,688

368,910

1,199,351

1,256,041

1,177,067

368,507

8,263

202,338

70,970

4,956

147,180

333,466

7,091

260,274

49,907

6,793

137,140

312,601

6,561

220,240

11,067

4,958

97,642

6,173,628

6,816,689

6,619,432

(2,702,647)

(2,985,805)

(2,806,409)

6,456,786

6,637,293

6,273,407

106.

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3. Selling, general and administrative expenses

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Services and fees

Labor cost

Depreciation of property, plant and equipment

Amortization of intangible assets

Commissions, freight and other selling expenses

Provisions for contingencies

Allowances for doubtful accounts

Taxes

Other

4. Labor costs
(included in Cost of sales and in Selling, general
and administrative expenses)

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Wages, salaries and social security costs

Employees' service rescission indenmnity (including those classified as defined contribution plans)

Pension benefits - defined benefit plans

Employee retention and long term incentive program

At the year-end, the number of employees was 26,825 in 2013, 26,673 in 2012 and 26,980 in 2011.

2013

2012

2011

177,996

575,588

19,132

214,152

600,239

31,429

23,236

170,659

128,782

213,073

570,950

15,023

212,074

550,611

21,163

3,840

170,582

126,473

218,991

533,219

12,400

222,783

545,228

35,847

7,749

148,912

134,111

1,941,213

1,883,789

1,859,240

2013

2012

2011

1,714,471

1,772,399

1,666,176

10,978

32,112

17,378

13,939

20,808

19,845

14,923

10,300

18,887

1,774,939

1,826,991

1,710,286

107.

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r
o
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e
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a
u
n
n
A

5. Other operating items

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

(I) OTHER OPERATING INCOME

Reimbursement from insurance companies and other third parties agreements (*)

Net income from other sales

Net rents

Other

(II) OTHER OPERATING EXPENSES

2013

2012

2011

148

10,663

3,494

–

49,495

12,314

2,988

6,583

695

5,510

2,487

2,849

14,305

71,380

11,541

Contributions to welfare projects and non-profits organizations

21,147

22,226

Provisions for legal claims and contingencies

Loss on fixed assets and material supplies disposed / scrapped

Allowance for doubtful receivables

Other

(2)

1,708

5,365

(668)

227

5,936

–

4,341

1,411

691

–

28,257

27,721

6,491

(*) In 2012, Confab Industrial S.A., a Tenaris subsidiary organized in Brazil (“Confab”) collected from

the Brazilian government an amount, net of attorney fees and other related expenses, of
approximately Brazilian reais (“BRL”) 99.8 million (approximately $49.2 million), recorded in other
operating income. The income tax effect on this gain amounted to approximately $17.1 million.

This payment was ordered by a final court judgment that represents Confab’s right to interest and
monetary adjustment over a tax benefit that had been paid to Confab in 1991 and determined
the amount of such right.

108.

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6. Financial results

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Interest income

Interest expense

Interest net

Net foreign exchange transaction results

Foreign exchange derivatives contracts results

Other

Other financial results

Net financial results

7. Equity in earnings (losses) of associated

companies

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

From associated companies

Gain on sale of associated companies and others

Impairment loss on associated companies (see Note 27)

2013

2012

2011

33,094

(70,450)

(37,356)

37,179

4,414

(32,916)

8,677

33,459

(55,507)

(22,048)

(10,929)

(3,194)

(13,933)

(28,056)

30,840

(52,407)

(21,567)

65,365

(49,349)

(4,748)

11,268

(28,679)

(50,104)

(10,299)

2013

2012

2011

46,098

–

46,098

4,545

5,899

(73,650)

(63,206)

61,992

–

61,992

8. Income tax

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Current tax

Deferred tax

109.

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r
o
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a
u
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n
A

2013

2012

2011

594,179

33,698

627,877

636,624

(95,066)

573,769

(98,399)

541,558

475,370

The tax on Tenaris’s income before tax differs
from the theoretical amount that would arise using
the tax rate in each country as follows:

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

2013

2012

2011

Income before income tax

2,202,249

2,243,297

1,896,574

Tax calculated at the tax rate in each country

Non taxable income / Non deductible expenses

Changes in the tax rates

Effect of currency translation on tax base (*)

Utilization of previously unrecognized tax losses

Tax charge

(*) Tenaris applies the liability method to recognize deferred income tax on temporary differences
between the tax bases of assets and their carrying amounts in the financial statements. By
application of this method, Tenaris recognizes gains and losses on deferred income tax due to the
effect of the change in the value on the tax basis in subsidiaries, which have a functional currency
different to their local currency. These gains and losses are required by IFRS even though the
revalued / devalued tax basis of the relevant assets will not result in any deduction / obligation for
tax purposes in future periods.

465,029

72,768

8,287

92,695

(10,902)

627,877

456,530

80,527

4,707

5,214

418,358

43,265

(7,736)

25,000

(5,420)

(3,517)

541,558

475,370

110.

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9. Dividends distribution
On November 6, 2013, the Company’s board of
directors approved the payment of an interim
dividend of $0.13 per share ($0.26 per ADS), or
approximately $153.5 million, on November 21, 2013,
with an ex-dividend date of November 18, 2013.

On May 2, 2013 the Company’s Shareholders
approved an annual dividend in the amount of $0.43
per share ($0.86 per ADS). The amount approved
included the interim dividend previously paid in
November 22, 2012 in the amount of $0.13 per share
($0.26 per ADS). The balance, amounting to $0.30
per share ($0.60 per ADS), was paid on May 23,

2013. In the aggregate, the interim dividend paid in
November 2012 and the balance paid in May 2013
amounted to approximately $507.6 million.

On May 2, 2012, the Company’s shareholders
approved an annual dividend in the amount of $0.38
per share ($0.76 per ADS). The amount approved
included the interim dividend previously paid in
November 2011, in the amount of $0.13 per share
($0.26 per ADS). The balance, amounting to $0.25
per share ($0.50 per ADS), was paid on May 24,
2012. In the aggregate, the interim dividend paid in
November 2011 and the balance paid in May 2012
amounted to approximately $449 million.

On June 1, 2011, the Company’s shareholders
approved an annual dividend in the amount of
$0.34 per share ($0.68 per ADS). The amount
approved included the interim dividend previously
paid in November 2010, in the amount of $0.13 per
share ($0.26 per ADS). The balance, amounting to
$0.21 per share ($0.42 per ADS), was paid on June
23, 2011. In the aggregate, the interim dividend paid
in November 2010 and the balance paid in June
2011 amounted to approximately $401 million.

111.

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r
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u
n
n
A

112.

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i
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e
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10. Property, plant and equipment, net

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2013

COST

Land,
building and
improvements

Plant and
production
equipment

Vehicles,
furniture and
fixtures

Work in
progress

Spare
parts and
equipment

Total

Values at the beginning of the year

1,417,994

7,503,358

321,271

Translation differences

Additions

Disposals / Consumptions

Increase due to the consolidation of joint operations

Transfers / Reclassifications

Values at the end of the year

(7,616)

10,121

(17,388)

–

95,077

36,436

5,242

(30,156)

–

558,533

(3,348)

4,963

(8,973)

1,301

24,100

1,498,188

8,073,413

339,314

DEPRECIATION

Accumulated at the beginning of the year

331,806

4,811,325

182,169

Translation differences

Depreciation charge

Transfers / Reclassifications

Increase due to the consolidation of joint operations

Disposals / Consumptions

(1,581)

43,469

1,511

–

(1,901)

22,046

317,242

3,339

–

(22,451)

(2,402)

25,678

(1,655)

392

(6,627)

Accumulated at the end of the year

373,304

5,131,501

197,555

489,894

(7,776)

641,235

–

608

(682,059)

441,902

–

43,674

348

5,308

(6,783)

142

(4,935)

9,776,191

18,044

666,869

(63,300)

2,051

(9,284)

37,754

10,390,571

15,921

458

1,250

(3,187)

105

(103)

5,341,221

18,521

387,639

497

(31,082)

14,444

5,716,804

At December 31, 2013

1,124,884

2,941,912

141,759

441,902

23,310

4,673,767

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2012

COST

Land,
building and
improvements

Plant and
production
equipment

Vehicles,
furniture and
fixtures

Work in
progress

Spare
parts and
equipment

Total

113.

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r
o
p
e
R

a
u
n
n
A

Values at the beginning of the year

1,311,786

7,149,005

287,202

Translation differences

Additions

Disposals / Consumptions

Increase due to business combinations

Transfers / Reclassifications

Values at the end of the year

DEPRECIATION

(8,824)

29,000

(1,513)

–

87,545

877

14,765

(57,128)

5,325

390,514

(2,881)

3,121

(6,927)

138

40,618

1,417,994

7,503,358

321,271

Accumulated at the beginning of the year

293,438

4,580,997

164,292

Translation differences

Depreciation charge

Transfers / Reclassifications

Disposals / Consumptions

(1,869)

39,082

1,256

(101)

396

282,375

831

(53,274)

(2,043)

25,702

(754)

(5,028)

Accumulated at the end of the year

331,806

4,811,325

182,169

318,297

(5,201)

693,729

(58)

720

(517,593)

489,894

–

40,822

9,107,112

6,313

(4,060)

102

459

(15,991)

746,928

(69,686)

6,285

1,543

43,674

9,776,191

14,732

247

1,330

(377)

(11)

5,053,459

(3,269)

348,489

956

(58,414)

15,921

5,341,221

At December 31, 2012

1,086,188

2,692,033

139,102

489,894

27,753

4,434,970

Property, plant and equipment include capitalized interests for net amounts at December 31, 2013 and 2012
of $3,782 and $4,038 (there were no capitalized interests during the years 2013 and 2012)), respectively.

114.

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11. Intangible assets, net

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2013

COST

Values at the beginning of the year

Translation differences

Additions

Transfers / Reclassifications

Disposals

Information
system
projects

Licenses,
patents and
trademarks (*)

Goodwill

Customer
relationships

Total

310,524

493,822

2,147,433

2,059,946

5,011,725

(1,362)

85,974

5,820

(468)

655

(1,249)

(419)

–

(252)

–

(1,281)

86,629

4,571

(1,139)

Values at the end of the year

400,488

492,829

2,147,242

2,059,946

5,100,505

AMORTIZATION

Accumulated at the beginning of the year

218,531

273,443

340,488

979,347

1,811,809

Translation differences

Amortization charge

Disposals

Transfers / Reclassifications

Accumulated at the end of the year

(779)

31,104

(171)

1,231

249,916

–

30,237

–

(1,236)

302,444

–

(779)

161,074

222,415

–

(171)

(5)

340,488

1,140,421

2,033,269

At December 31, 2013

150,572

190,385

1,806,754

919,525

3,067,236

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31, 2012

COST

Values at the beginning of the year

Translation differences

Additions

Transfers / Reclassifications

Increase due to business combinations

Disposals

Values at the end of the year

AMORTIZATION

Accumulated at the beginning of the year

Translation differences

Amortization charge

Disposals

Transfers / Reclassifications

Accumulated at the end of the year

115.

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u
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A

Information
system
projects

Licenses,
patents and
trademarks (*)

Goodwill

Customer
relationships

Total

268,237

(1,277)

42,762

874

(83)

495,417

2,146,243

2,059,946

4,969,843

(78)

(1,558)

–

1,117

–

(1,282)

42,803

(684)

1,128

(83)

310,524

493,822

2,147,433

2,059,946

5,011,725

191,571

(827)

27,808

(103)

243,580

340,488

818,274

1,593,913

(242)

30,284

–

(179)

–

161,073

–

(1,069)

219,165

(103)

(97)

218,531

273,443

340,488

979,347

1,811,809

At December 31, 2012

91,993

220,379

1,806,945

1,080,599

3,199,916

(*) Includes Proprietary Technology.

The geographical allocation of goodwill for
the year ended December 31, 2013 was $1,614.5
million for North America, $189.4 million for
South America $2.2 million for Europe, and $0.7
million for Middle East & Africa.

116.

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The carrying amount of goodwill allocated by
CGU, as of December 31, 2013, was as follows:

All amounts in million U.S.dollars

As of December 31, 2013

Tubes Segment

Other Segment

Total

CGU

OCTG (USA and Colombia)

Tamsa (Hydril and other)

Siderca (Hydril and other)

Hydril

Electric Conduits

Coiled Tubing

Other

Total

Maverick
Acquisition

Hydril
Acquisition

Other

Maverick
Acquisition

721.5

–

45.8

–

345.9

265.0

309.0

–

767.3

919.9

–

19.4

93.3

–

2.9

115.6

–

4.0

–

4.0

721.5

365.3

358.3

309.0

45.8

4.0

2.9

1,806.8

Impairment tests
In 2013 and 2012, the CGU’s shown in the previous
table were tested for impairment. No other CGU
was tested for impairment in 2013 and 2012 as no
impairment indicators were identified.

Tenaris determined that the CGUs with a
significant amount of goodwill in comparison to
the total amount of goodwill as of December 31,
2013, were: OCTG, Tamsa, Siderca and Hydril,
which represented 97.1% of total goodwill.

The value-in-use was used to determine the
recoverable amount for all the CGUs with a
significant amount of goodwill in comparison to
the total amount of goodwill.

Value-in-use is calculated by discounting the
estimated cash flows over a five year period based
on forecasts approved by management. For the
subsequent years beyond the five-year period, a
terminal value is calculated based on perpetuity
considering a nominal growth rate of 2%. The
growth rate considers the long-term average
growth rate for the oil and gas industry, the higher
demand to offset depletion of existing fields and
the Company’s expected market penetration.

Tenaris’s main source of revenue is the sale
of products and services to the oil and gas
industry, and the level of such sales is sensitive to
international oil and gas prices and their impact
on drilling activities. The main key assumptions,

117.

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a
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A

shared by all four CGUs are oil and natural gas
prices evolution and the level of drilling activity.
Tenaris uses the average number of active oil and
gas drilling rigs, or rig count, as published by Baker
Hughes, as a general indicator of activity in the oil
and gas sector. In the case of the OCTG CGU, these
assumptions are mainly related to the U.S. market.
In the case of Tamsa CGU and Siderca CGU,
assumptions are mainly related to the countries
where they are located, Mexico and Argentina
respectively, and to the international markets
as both facilities export a large amount of their
production. Regarding Hydril CGU, assumptions
are mainly related to the worldwide market.

In addition, key assumptions for OCTG CGU,
Tamsa CGU and Siderca CGU also include raw
materials costs as their production process consists
on the transformation of steel into pipes. In the
case of Tamsa CGU and Siderca CGU, steel comes
from their own steel shops, therefore they consume
steelmaking raw materials (e.g., iron ore and metal
scrap). In the case of OCTG CGU, the main raw
material is hot rolled steel coils. In the case of
Hydril CGU, raw material costs are negligible.

For purposes of assessing key assumptions,
Tenaris uses external sources of information and
management judgment based on past experience.

The discount rates used are based on the respective
weighted average cost of capital (WACC) which is
considered to be a good indicator of capital cost.
For each CGU where assets are allocated, a specific
WACC was determined taking into account the

industry, country and size of the business. In 2013,
the discount rates used were in a range between
10% and 13%.

From the CGUs with a significant amount of
goodwill assigned in comparison to the total amount
of goodwill, Tenaris has determined that the CGU
for which a reasonable possible change in a key
assumption would cause the CGUs’ carrying amount
to exceed its recoverable amount was OCTG CGU.

In OCTG CGU, the recoverable amount calculated
based on value in use exceeded carrying value
by $106 million as of December 31, 2013. The
main factors that could result in impairment
charges in future periods would be an increase
in the discount rate / decrease in growth rate
used in the Company’s cash flow projections
and a deterioration of the business, competitive
and economic factors, such as the cost of
raw materials, oil and gas prices, competitive
environment, capital expenditure program of
Tenaris’s clients and the evolution of the rig
count in the U.S. market. As there is a significant
interaction among the principal assumptions
made in estimating its cash flow projections, the
Company believes that a sensitivity analysis that
considers changes in one assumption at a time
could be potentially misleading. A reduction in
cash flows of 5.2%, a fall in growth rate to 1.3%
or a rise in discount rate of 40 basis points would
remove the remaining headroom.

As of December 31, 2013, no cumulative amount of
recognized impairment charges are subject to reversal.

118.

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a
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12. Investments in associated companies

YEAR ENDED DECEMBER 31

2013

2012

At the beginning of the year

Translation differences

Equity in earnings of associated companies

Impairment loss in associated companies

Dividends and distributions received

Acquisitions

Sale of associated company

Increase in equity reserves

At the end of the period

977,011

(87,666)

46,098

–

(16,334)

–

(9,033)

2,682

664,997

(108,480)

10,444

(73,650)

(18,708)

504,597

(3,140)

951

912,758

977,011

The principal associated companies are:

Company

Country of incorporation

% ownership - voting rights
at December 31

Value at
December 31

Ternium S.A.

Luxembourg

Usiminas S.A.

Brazil

Others

–

(*) Including treasury shares

2013

2012

2013

2012

11.46% (*)

2.5% - 5%

–

602,303

298,459

11,996

912,758

605,714

346,941

24,356

977,011

Ternium, is a steel producer in Latin America
with production facilities in Mexico, Argentina,
Colombia, the southern of United States and
Guatemala and it is one of Tenaris´s main
suppliers of round steel bars and flat steel products
for its pipes business.

Usiminas is a Brazilian producer of high quality
flat steel products used in the energy, automotive
and other industries and it is Tenaris’s principal
supplier of flat steel in Brazil for its pipes and
industrial equipment businesses.

Summarized selected financial information of
Ternium and Usiminas, including the aggregated
amounts of assets, liabilities, revenues and profit
or loss is as follows:

119.

t
r
o
p
e
R

a
u
n
n
A

Non-current assets

Current assets

Total assets

Non-current liabilities

Current liabilities

Total liabilities

Non-controlling interests

Revenues

Gross profit

Net (loss) income for the year attributable to owners

of the parent

2013

2012

Usiminas S.A.

Ternium S.A.

Total

Usiminas S.A.

Ternium S.A.

Total

9,347,605

4,038,373

7,153,162

3,219,462

16,500,767

10,762,700

7,211,371

17,974,071

7,257,835

5,275,579

3,655,628

8,931,207

13,385,978

10,372,624

23,758,602

16,038,279

10,866,999

26,905,278

3,174,490

2,171,729

2,185,421

1,849,159

5,359,911

4,020,888

4,334,830

2,643,954

2,306,640

2,125,446

6,641,470

4,769,400

5,346,219

4,034,580

9,380,799

6,978,784

4,432,086

11,410,870

905,847

5,970,626

676,960

(74,459)

998,009

1,903,856

932,050

1,065,730

1,997,780

8,530,012

1,929,720

455,425

14,500,638

6,502,352

8,608,054

15,110,406

2,606,680

380,966

340,380

(319,116)

1,741,675

2,082,055

142,043

(177,073)

120.

s
i
r
a
n
e
T

13. Other investments – non current

YEAR ENDED DECEMBER 31

Investments in other companies

Others

14. Receivables – non current

YEAR ENDED DECEMBER 31

Government entities

Employee advances and loans

Tax credits

Receivables from related parties

Legal deposits

Advances to suppliers and other advances

Others

Allowances for doubtful accounts – see Note 23 (I)

2013

2012

2,294

204

2,498

2,293

310

2,603

2013

2012

2,232

12,841

18,396

20,716

23,589

44,986

32,299

2,962

12,583

22,352

19,349

24,312

22,752

40,745

155,059

145,055

(2,979)

(2,995)

152,080

142,060

15. Inventories

YEAR ENDED DECEMBER 31

Finished goods

Goods in process

Raw materials

Supplies

Goods in transit

Allowance for obsolescence – see Note 24 (I)

16. Receivables and prepayments

121.

t
r
o
p
e
R

a
u
n
n
A

2013

2012

1,024,571

1,024,746

650,567

363,611

572,167

320,496

757,185

473,278

524,539

391,225

2,931,412

3,170,973

(228,765)

(185,168)

2,702,647

2,985,805

YEAR ENDED DECEMBER 31

2013

2012

Prepaid expenses and other receivables

Government entities

Employee advances and loans

Advances to suppliers and other advances

Government tax refunds on exports

Receivables from related parties

Derivative financial instruments

Miscellaneous

Allowance for other doubtful accounts – see Note 24 (I)

57,410

3,948

15,356

70,412

25,502

11,313

9,273

36,406

229,620

(9,396)

220,224

49,456

6,600

13,421

65,843

30,206

42,361

17,852

45,309

271,048

(10,516)

260,532

122.

s
i
r
a
n
e
T

17. Current tax assets and liabilities

YEAR ENDED DECEMBER 31

CURRENT TAX ASSETS

V.A.T. credits

Prepaid taxes

CURRENT TAX LIABILITIES

Income tax liabilities

V.A.T. liabilities

Other taxes

18. Trade receivables

YEAR ENDED DECEMBER 31

Current accounts

Receivables from related parties

Allowance for doubtful accounts – see Note 24 (I)

2013

2012

69,926

86,265

97,173

78,389

156,191

175,562

149,154

39,984

77,622

266,760

129,419

27,394

97,790

254,603

2013

2012

2,005,209

2,077,117

28,924

22,804

2,034,133

2,099,921

(51,154)

(29,143)

1,982,979

2,070,778

The following table sets forth details of the aging
of trade receivables:

AT DECEMBER 31, 2013

Trade Receivables

Not Due

Past due

123.

t
r
o
p
e
R

a
u
n
n
A

Guaranteed

Not guaranteed

Guaranteed and not guaranteed

Allowance for doubtful accounts

Net Value

AT DECEMBER 31, 2012

Guaranteed

Not guaranteed

Guaranteed and not guaranteed

Allowance for doubtful accounts

Net Value

1 - 180 days

> 180 days

628,929

1,405,204

2,034,133

481,079

1,122,078

1,603,157

(51,154)

–

1,982,979

1,603,157

651,399

1,448,522

2,099,921

547,986

1,159,158

1,707,144

(29,143)

–

2,070,778

1,707,144

130,316

227,317

357,633

(64)

357,569

98,475

259,165

357,640

(1,138)

356,502

17,534

55,809

73,343

(51,090)

22,253

4,938

30,199

35,137

(28,005)

7,132

19. Other investments and Cash and cash equivalents

YEAR ENDED DECEMBER 31

OTHER INVESTMENTS

Fixed Income (time-deposit, zero cupon bonds, commercial papers)

Bonds and other fixed Income

Equity & Fund Investments

CASH AND CASH EQUIVALENTS

Cash at banks

Liquidity funds

Short – term investments

2013

2012

639,538

513,075

74,717

333,658

307,711

3,040

1,227,330

644,409

123,162

95,042

396,325

285,395

301,663

241,400

614,529

828,458

124.

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i
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a
n
e
T

20. Borrowings

YEAR ENDED DECEMBER 31

NON-CURRENT

Bank borrowings

Finance lease liabilities

Costs of issue of debt

CURRENT

Bank borrowings and other loans including related companies

Bank overdrafts

Finance lease liabilities

Costs of issue of debt

Total Borrowings

The maturity of borrowings is as follows:

2013

2012

247,056

536,134

1,471

(2,309)

1,547

(5,274)

246,218

532,407

668,132

16,384

575

(374)

684,717

930,935

1,157,983

55,802

630

(2,630)

1,211,785

1,744,192

AT DECEMBER 31, 2013

1 year or less

1 - 2 years

2 - 3 years

3 - 4 years

4 - 5 years

Over 5 years

Total

Financial lease

Other borrowings

Total borrowings

Interest to be accrued (*)

Total

AT DECEMBER 31, 2012

Financial lease

Other borrowings

Total borrowings

Interest to be accrued (*)

Total

(*)

Includes the effect of hedge accounting.

575

684,142

684,717

26,643

711,360

630

1,211,155

1,211,785

18,615

1,230,400

520

98,891

99,411

7,244

106,655

415

231,007

231,422

12,802

244,224

490

91,202

91,692

3,924

95,616

403

161,997

162,400

5,753

168,153

274

45,860

46,134

891

47,025

372

83,599

83,971

3,344

87,315

131

7,066

7,197

251

7,448

225

45,622

45,847

748

46,595

1,728

1,784

1,805

132

8,635

8,767

2,046

928,889

930,935

38,974

969,909

2,177

1,742,015

1,744,192

230

41,492

8,997

1,785,684

Significant borrowings include:

In million of $

Disbursement date

Borrower

Type

Original &
Outstanding

Final maturity

2013

Mainly 2013

January 2012

Tamsa

Siderca

Confab

Bank loans

Syndicated

420

217

193

2014

Mainly 2014

January 2017 (**)

125.

t
r
o
p
e
R

a
u
n
n
A

(**) The main covenants on these loan agreements are limitations on liens and encumbrances, limitations on the sale of

certain assets, restrictions on investments, compliance with financial ratios (i.e., leverage ratio and interest coverage ratio)
and restrictions on amendments

As of December 31, 2013, Tenaris was in
compliance with all of its covenants.

The weighted average interest rates before tax
shown below were calculated using the rates set for
each instrument in its corresponding currency as
of December 31, 2013 and 2012 (considering hedge
accounting where applicable).

Total borrowings

(*) The increase in weighted average interest rates is explained by an increase in the proportion of unhedged, ARS-

denominated debt. This represented 25.9 % of total borrowings as of December 31, 2013 and 3.4% as of December 31,
2012. Tenaris estimates that the impact of ARS depreciation on the ARS-denominated debt balance during 2013 has been
equivalent to a reduction of 7.05% to its weighted average interest rate before tax. This impact is posted under net
foreign exchange results in Other Financial Results.

2013 (*)

2012

7.50%

2.60%

126.

s
i
r
a
n
e
T

Breakdown of long-term borrowings by currency
and rate is as follows:

Non current borrowings

Currency

USD

ARS

Others

Total non current borrowings

Interest rates

Year ended December 31

Variable

Fixed

Variable

Fixed

2013

2012

218,134

20,778

1,347

5,959

510,892

13,491

1,206

6,818

246,218

532,407

Breakdown of short-term borrowings by currency
and rate is as follows:

Current borrowings

Currency

Interest rates

Year ended December 31

USD

EURO

MXN

ARS

Others

Variable

Fixed

Variable

Fixed

Variable

Fixed

2013

2012

24,823

25,019

38,279

8,432

366,380

215,429

4,394

953

1,008

240,894

104,845

179,549

65,107

339,683

239,446

32,650

227

9,384

Total current borrowings

684,717

1,211,785

21. Deferred income tax
Deferred income taxes are calculated in full on
temporary differences under the liability method
using the tax rate of each country.

Deferred tax liabilities

The evolution of deferred tax assets and
liabilities during the year are as follows:

127.

t
r
o
p
e
R

a
u
n
n
A

At the beginning of the year

Translation differences

Charged directly to Other Comprehensive Income

Income statement charge

At December 31, 2013

At the beginning of the year

Translation differences

Increase due to business combinations

Charged directly to Other Comprehensive Income

Income statement credit

At December 31, 2012

(*)

Includes the effect of currency translation on tax base explained in Note 8.

Fixed
assets

335,484

(1,703)

–

26,427

360,208

Inventories

Intangible
and Other (*)

Total

15,269

530,437

881,190

–

6,257

21,526

(223)

11,441

6,564

(1,926)

11,441

39,248

548,219

929,953

354,053

25,739

578,307

958,099

541

636

–

(19,746)

335,484

–

(10,470)

15,269

(239)

–

(1,429)

(46,202)

302

636

(1,429)

(76,418)

530,437

881,190

Deferred tax assets

128.

s
i
r
a
n
e
T

Provisions and
allowances

Inventories

Tax
losses

Other

Total

At the beginning of the year

Translation differences

Increase due to consolidation of joint operations

Charged directly to Other Comprehensive Income

Income statement charge / (credit)

At December 31, 2013

At the beginning of the year

Translation differences

Increase due to business combinations

Charged directly to Other Comprehensive Income

Income statement charge / (credit)

At December 31, 2012

(56,406)

6,104

(17)

753

(70,388)

2,301

(45)

–

(183,560)

(23,141)

(105,409)

(368,516)

1,311

–

(843)

(1,442)

(7,807)

6,572

(1,459)

(7,054)

(5,550)

(4,070)

20,007

(2,669)

(18,818)

(53,636)

(162,242)

(25,810)

(134,319)

(376,007)

(171,465)

(35,196)

(105,912)

(382,961)

647

(189)

–

(199)

–

(1,668)

2,370

2,749

(234)

(1,668)

13,598

11,726

(12,553)

12,055

(56,406)

(183,560)

(23,141)

(105,409)

(368,516)

The recovery analysis of deferred tax assets and
deferred tax liabilities is as follows:

YEAR ENDED DECEMBER 31

Deferred tax assets to be recovered after 12 months

Deferred tax liabilities to be recovered after 12 months

129.

t
r
o
p
e
R

a
u
n
n
A

2013

2012

(119,488)

877,524

(111,616)

867,181

Deferred income tax assets and liabilities are offset
when (1) there is a legally enforceable right to set-
off current tax assets against current tax liabilities
and (2) when the deferred income taxes relate
to the same fiscal authority on either the same

taxable entity or different taxable entities where
there is an intention to settle the balances on a net
basis. The following amounts, determined after
appropriate set-off, are shown in the Consolidated
Statement of Financial Position:

YEAR ENDED DECEMBER 31

Deferred tax assets

Deferred tax liabilities

The movement on the net deferred income tax
liability account is as follows:

YEAR ENDED DECEMBER 31

At the beginning of the year

Translation differences

Charged directly to Other Comprehensive Income

Income statement credit

Increase due to business combinations

Increase due to consolidation of joint operations

At the end of the period

2013

2012

(197,159)

751,105

553,946

(215,867)

728,541

512,674

2013

2012

512,674

4,646

4,387

33,698

–

(1,459)

553,946

575,138

3,051

(3,097)

(62,820)

402

–

512,674

130.

s
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22. Other liabilities

I. Other liabilities – Non current

YEAR ENDED DECEMBER 31

Post-employment benefits

Other-long term benefits

Taxes Payable

Miscellaneous

Post-employment benefits
Unfunded

YEAR ENDED DECEMBER 31

Values at the beginning of the period

Current service cost

Interest cost

Curtailments and settlements

Remeasurements (*)

Translation differences

Increase due to business combinations

Benefits paid from the plan

Other

At the end of the year

(*) For 2013, loss of $3.0 million attributable to demographic assumptions and a gain of $6.4 million

attributable to financial assumptions.

2013

2012

169,215

82,439

–

25,603

277,257

184,323

68,771

2,065

47,285

302,444

2013

2012

131,475

18,373

7,220

1,212

(3,403)

(1,561)

–

(15,299)

(1,086)

136,931

120,484

12,348

3,709

–

2,140

(1,143)

1,189

(9,342)

2,090

131,475

The principal actuarial assumptions used
were as follows:

YEAR ENDED DECEMBER 31

Discount rate

Rate of compensation increase

131.

t
r
o
p
e
R

a
u
n
n
A

2013

2012

3% - 7%

2% - 5%

As of December 31, 2013, an increase / (decrease)
of 1% in the discount rate assumption would
have generated an impact on the defined benefit
obligation of $5.5 million and $6.2 million and
an increase / (decrease) of 1% in the rate of
compensation assumption would have generated
an impact on the defined benefit obligation of $4.5
million and $4.1 million. The above sensitivity
analyses are based on a change in an assumption

while holding all other assumptions constant. In
practice, this is unlikely to occur, and changes in
some of the assumptions may be correlated.

Funded
The amounts recognized in the statement of
financial position for the current annual period
and the previous annual period are as follows:

YEAR ENDED DECEMBER 31

Present value of funded obligations

Fair value of plan assets

(Assets) / Liability (*)

(*) In 2013 and 2012, $0.6 million and $2.2 million corresponding to an overfunded plan were

reclassified within other non-current assets, respectively.

2013

2012

177,433

(145,777)

31,656

191,154

(140,550)

50,604

132.

s
i
r
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n
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T

The movement in the present value of funded
obligations is as follows:

YEAR ENDED DECEMBER 31

At the beginning of the year

Translation differences

Current service cost

Interest cost

Remeasurements (*)

Benefits paid

Other

At the end of the year

(*) For 2013, loss of $7.5 million attributable to demographic assumptions and a gain of $14.7 million

attributable to financial assumptions.

The movement in the fair value of plan assets
is as follows:

YEAR ENDED DECEMBER 31

At the beginning of the year

Expected return on plan assets

Remeasurements

Translation differences

Contributions paid to the plan

Benefits paid from the plan

Other

At the end of the year

2013

2012

191,154

(3,208)

430

7,366

(7,174)

(11,135)

–

172,116

(62)

5,148

7,921

14,211

(9,636)

1,456

177,433

191,154

2013

2012

(140,550)

(134,581)

(2,489)

(7,737)

1,632

(7,821)

11,135

(8,318)

(2,908)

1,588

(5,972)

9,636

(145,777)

(140,550)

The major categories of plan assets as a percentage
of total plan assets are as follows:

AT DECEMBER, 31

Equity instruments

Debt instruments

Others

The principal actuarial assumptions used
were as follows:

YEAR ENDED DECEMBER 31

Discount rate

Rate of compensation increase

133.

t
r
o
p
e
R

a
u
n
n
A

2013

2012

47.5%

52.5%

–

40.0%

43.0%

17.0%

2013

2012

4% - 5%

3% - 4%

4% - 5%

3% - 4%

The expected return on plan assets is determined
by considering the expected returns available on
the assets underlying the current investment policy.
Expected return on plan assets is determined based
on long-term, prospective rates of return as of the
end of the reporting period.

As of December 31, 2013, an increase / (decrease)
of 1% in the discount rate assumption would
have generated an impact on the defined benefit
obligation of $21.1 million and $24.7 million and

an increase / (decrease) of 1% in the discount rate
assumption would have generated an impact on
the defined benefit obligation of $2.0 million and
$1.9 million. The above sensitivity analyses are
based on a change in an assumption while holding
all other assumptions constant. In practice, this
is unlikely to occur, and changes in some of the
assumptions may be correlated.

The employer contributions expected to be paid for
the year 2014 amounts approximately to $8.0 million.

134.

s
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n
e
T

II. Other liabilities – current

YEAR ENDED DECEMBER 31

Payroll and social security payable

Liabilities with related parties

Derivative financial instruments

Miscellaneous

23. Non-current allowances and provisions

I. Deducted from non current receivables

YEAR ENDED DECEMBER 31

Values at the beginning of the year

Translation differences

Additional provisions

Used

Values at the end of the year

II. Liabilities

YEAR ENDED DECEMBER 31

Values at the beginning of the year

Translation differences

Additional provisions

Reclassifications

Used

Increase due to the consolidation of joint operations

Values at the end of the year

2013

2012

207,425

261,223

8,268

35,282

4,023

14,031

39,551

250,997

318,828

2013

2012

(2,995)

740

(752)

(3,445)

450

–

(2,979)

(2,995)

2013

2011

67,185

(8,065)

20,852

(3,387)

(9,840)

66,795

72,975

(4,427)

10,871

–

(12,234)

–

67,185

135.

t
r
o
p
e
R

a
u
n
n
A

24. Current allowances and provisions

I. Deducted from assets

YEAR ENDED DECEMBER 31, 2013

Values at the beginning of the year

Translation differences

Additional allowances

Increase due to the consolidation of joint operations

Used

At December 31, 2013

YEAR ENDED DECEMBER 31, 2012

Values at the beginning of the year

Translation differences

Additional allowances

Increase due to business combinations

Used

At December 31, 2012

Allowance for doubtful
accounts - Trade receivables

Allowance for other doubtful
accounts - Other receivables

Allowance for inventory
obsolescence

(29,143)

(17)

(23,236)

(7)

1,249

(51,154)

(25,949)

(65)

(3,840)

(269)

980

(29,143)

(10,516)

1,282

(956)

–

794

(9,396)

(5,680)

359

(5,936)

–

741

(10,516)

(185,168)

1,589

(70,970)

–

25,784

(228,765)

(152,737)

985

(49,907)

(604)

17,095

(185,168)

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II. Liabilities

YEAR ENDED DECEMBER 31, 2013

Values at the beginning of the year

Translation differences

Additional allowances

Reclassifications

Used

Increase due to the consolidation of joint operations

At December 31, 2013

YEAR ENDED DECEMBER 31, 2012

Values at the beginning of the year

Translation differences

Additional allowances / (reversals)

Reclassifications

Used

At December 31, 2012

Sales risks

Other claims and
contingencies

14,112

(335)

8,512

366

(12,985)

–

9,670

11,286

(82)

16,619

344

(14,055)

14,112

12,846

490

2,063

3,021

(2,492)

117

16,045

22,319

245

(6,995)

(354)

(2,369)

12,846

Total

26,958

155

10,575

3,387

(15,477)

117

25,715

33,605

163

9,624

(10)

(16,424)

26,958

25. Derivative financial instruments

Net fair values of derivative financial instruments
The net fair values of derivative financial
instruments disclosed within Other Receivables and
Other Liabilities at the reporting date, in accordance
with IAS 39, are:

YEAR ENDED DECEMBER 31

2013

2012

Foreign exchange derivatives contracts

Contracts with positive fair values

Foreign exchange derivatives contracts

Contracts with negative fair values

Total

9,273

(8,268)

1,005

17,852

(14,031)

(3,821)

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Foreign exchange derivative contracts

and hedge accounting
Tenaris applies hedge accounting to certain cash
flow hedges of highly probable forecast transactions.
The net fair values of exchange rate derivatives,
including embedded derivatives and those derivatives
that were designated for hedge accounting as of
December 2013 and 2012, were as follows:

Purchase currency

Sell currency

USD

BRL

EUR

CAD

MXN

USD

COP

USD

ARS

USD

EUR

USD

MXN

USD

JPY

Others

Total

Term

2014

Fair Value

Hedge Accounting Reserve

2013

–

5,604

411

(456)

(510)

(3,285)

(11)

(675)

(145)

1,005

2012

1,301

824

1,272

(223)

(105)

148

1,324

(847)

(202)

329

3,821

2013

–

244

(21)

–

(2)

(101)

–

120

2012

(4,043)

(818)

2,913

–

(563)

–

(349)

(2,860)

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Following is a summary of the hedge
reserve evolution:

Equity Reserve Dec-11

Movements 2012

Equity Reserve Dec-12

Movements 2013

Equity Reserve Dec-13

Foreign Exchange

Total Cash flow Hedge

(8,211)

5,351

(2,860)

2,980

120

Tenaris estimates that the cash flow hedge reserve
at December 31, 2013 will be recycled to the
Consolidated Income Statement during 2014.

26. Contingencies, commitments and restrictions

on the distribution of profits

Contingencies
Tenaris is from time to time subject to various claims,
lawsuits and other legal proceedings, including
customer claims, in which third parties are seeking
payment for alleged damages, reimbursement for
losses or indemnity. Some of these claims, lawsuits
and other legal proceedings involve highly complex
issues, and often these issues are subject to substantial
uncertainties. Accordingly, the potential liability with
respect to a large portion of such claims, lawsuits
and other legal proceedings cannot be estimated
with certainty. Management with the assistance of
legal counsel periodically reviews the status of each
significant matter and assesses potential financial
exposure. If a potential loss from a claim, lawsuit or
proceeding is considered probable and the amount

can be reasonably estimated, a provision is recorded.
Accruals for loss contingencies reflect a reasonable
estimate of the losses to be incurred based on
information available to management as of the date
of preparation of the financial statements, and take
into consideration Tenaris’ litigation and settlement
strategies. The Company believes that the aggregate
provisions recorded for potential losses in these
financial statements (Notes 23 and 24) are adequate
based upon currently available information. However,
if management’s estimates prove incorrect, current
reserves could be inadequate and Tenaris could incur
a charge to earnings which could have a material
adverse effect on Tenaris’ results of operations,
financial condition, net worth and cash flows.

Tax assessment in Italy
A Tenaris Italian company received on December
24, 2012 a tax assessment from the Italian

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tax authorities related to allegedly omitted
withholding tax on dividend payments made in
2007. On February 21, 2013, the company filed
an appeal to this assessment with the tax court
in Milan. The assessment is for an estimated
amount of EUR281 million (approximately $388
million), comprising EUR76million (approximately
$105 million) in principal and EUR205 million
(approximately $283 million) in interest and
penalties, as of December 31, 2013. The hearing
on this appeal was held on October 18, 2013, and
the tax court’s decision is currently pending. On
December 24, 2013 the company received a new tax
assessment from the Italian tax authorities related
to allegedly omitted withholding tax on dividend
payments made in 2008. On February 20, 2014, the
company filed an appeal to the 2008 assessment
with the tax court in Milan. This second
assessment is for an estimated amount of EUR247
million (approximately $341 million), comprising
EUR67 million (approximately $92 million) in
principal and EUR180 million (approximately $248
million) in interest and penalties, as of December
31, 2013.Tenaris believes, based and confirmed by
tax expert’s opinions, that it is not probable that
the ultimate resolution of the matter will result in
a material obligation.

•

Commitments
Set forth is a description of Tenaris’s main
outstanding commitments :

•

A Tenaris company is a party to a contract with
Nucor Corporation under which it is committed to

purchase on a monthly basis a minimum volume of
hot-rolled steel coils at prices that are negotiated
annually by reference to prices to comparable
Nucor customers. The contract became effective
in May 2013 and will be in force until December
2017; provided, however, that either party may
terminate the contract at any time after January 1,
2015 with 12-month prior notice. As of December
31, 2013, the estimated aggregate contract amount
through December 31, 2015, calculated at current
prices, is approximately $556 million.

A Tenaris company entered into a contract with
Siderar, a subsidiary of the Company’s affiliate
Ternium S.A. (“Ternium”) for the supply of steam
generated at the power generation facility that
Tenaris owns in the compound of the Ramallo
facility of Siderar. Under this contract, Tenaris
is required to provide to Siderar 250 tn/hour
of steam through to 2018, and Siderar has the
obligation to take or pay this volume. The amount
of this gas supply agreement totals approximately
$66 million.

A Tenaris company, entered into various contracts
with suppliers for a current total amount of
approximately $236 million related to the
investment plan to expand US operations with the
installation of a state-of-the-art seamless pipe mill,
heat treatment and premium threading facilities.

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Restrictions to the distribution of profits and

payment of dividends
As of December 31, 2013, equity as defined under
Luxembourg law and regulations consisted of:

All amounts in thousands of U.S. dollars

Share capital

Legal reserve

Share premium

Retained earnings including net income for the year ended December 31, 2013

Total equity in accordance with Luxembourg law

1,180,537

118,054

609,733

21,899,189

23,807,513

At least 5% of the Company’s net income per year,
as calculated in accordance with Luxembourg law
and regulations, must be allocated to the creation of
a legal reserve equivalent to 10% of the Company’s
share capital. As of December 31, 2013, this reserve
is fully allocated and additional allocations to the
reserve are not required under Luxembourg law.
Dividends may not be paid out of the legal reserve.

The Company may pay dividends to the extent,
among other conditions, that it has distributable
retained earnings calculated in accordance with
Luxembourg law and regulations.

At December 31, 2013, distributable amount under
Luxembourg law totals $22.5 billion, as detailed
below.

All amounts in thousands of U.S. dollars

Retained earnings at December 31, 2012 under Luxembourg law

Other income and expenses for the year ended December 31, 2013

Dividends approved

Retained earnings at December 31, 2013 under Luxembourg law

Share premium

Distributable amount at December 31, 2013 under Luxembourg law

22,411,870

(5,050)

(507,631)

21,899,189

609,733

22,508,922

27. Business combinations, other acquisitions and

investments

Mexican Power Plant Investment
Following the execution of an August 2013
memorandum of understanding for the construction
and operation of a natural gas-fired combined cycle

electric power plant in the Pesquería area of the
State of Nuevo León, Mexico, as of February 2014,
Tenaris, Ternium and Tecpetrol International S.A.
(a wholly-owned subsidiary of San Faustin S.A.,
the controlling shareholder of both Tenaris and
Ternium) have completed their initial investments
in Techgen, S.A. de C.V., a Mexican project

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company owned 48% by Ternium, 30% by
Tecpetrol and 22% by Tenaris. Tenaris and Ternium
have also agreed to enter into power supply and
transportation agreements with Techgen, pursuant
to which Ternium and Tenaris will contract 78%
and 22%, respectively, of Techgen’s power capacity
of between 850 and 900 megawatts.

Acquisition of participation in Usinas Siderúrgicas

de Minas Gerais S.A. (“Usiminas”)
On January 16, 2012, Tenaris’s Brazilian
subsidiary, Confab acquired 25 million ordinary
shares of Usiminas, representing 5.0% of the
shares with voting rights and 2.5% of the total
share capital. The price paid for each ordinary
share was Brazilian reais (“BRL”) 36, representing
a total cost to Confab of $504.6 million. Confab
financed the acquisition through an unsecured
5-year term loan in the principal amount of $350
million and cash on hand.

This acquisition was part of a larger transaction
pursuant to which Ternium, certain of its
subsidiaries and Confab joined Usiminas’s
existing control group through the acquisition of
ordinary shares representing 27.7% of Usiminas’s
total voting capital and 13.8% of Usiminas’s
total share capital. In addition, Ternium, its
subsidiaries and Confab entered into an amended
and restated Usiminas shareholders’ agreement
with Nippon Steel, Mitsubishi, Metal One and
Previdência Usiminas, formerly known as Caixa
dos Empregados da Usiminas, an Usiminas
employee fund, governing the parties’ rights within
the Usiminas control group. As a result of these
transactions, the control group, which holds 329.4
million ordinary shares representing the majority
of Usiminas’s voting rights, is now formed as
follows: Nippon Group 47.2%, Ternium/Tenaris
Group 42.4%, and Previdência Usiminas 10.4%.

The rights of Ternium and its subsidiaries and
Confab within the Ternium/Tenaris Group are
governed under a separate shareholders agreement.

Upon completion of its purchase price allocation
procedures, in 2012, the Company determined a
goodwill included within the investment balance
of $142.7 million. An impairment test over the
investment in Usiminas was performed as of
December 31, 2012, and subsequently the goodwill
of such investment was written down by $73.7
million. The impairment was mainly due to
expectations of a weaker industrial environment
in Brazil, where industrial production and
consequently steel demand have been suffering
downward adjustments. In addition, a higher degree
of uncertainty regarding future prices of iron ore
led to a reduction in the forecast of long term iron
ore prices that affected cash flow expectations.

To determine the recoverable value, the value in use
was used, which was calculated as the present value
of the expected cash flows, considering the expected
prices for the years covered by the projection. As of
December 31, 2012 the discount rate used to test the
investment in Usiminas for impairment was 9.6%.
As of December 31, 2012, following the impairment
charges, the Company’s investment in Usiminas
amounted to $346.9 million.

On February 13, 2014, Usiminas published its annual
accounts as of and for the year ended December
31, 2013, which state that revenues, post-tax losses
from continuing operations and net assets amounted
to $5.971 million, $75 million and $7.134 million,
respectively. As of December 31, 2013, the Company’s
investment in Usiminas, amounted to $298.5 million.
This amount includes Goodwill and other tangible
and intangible assets allocated in the purchase price
for $44 million and $73.8 million, respectively.

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In 2013, Confab was notified of a lawsuit filed in
Brazil by Companhia Siderúrgica Nacional (CSN)
and various entities affiliated with CSN against
Confab and the other entities acquiring Usiminas
shares in the January 2012 transaction.

The CSN lawsuit alleges that, under applicable
Brazilian laws and rules, the acquirers were required
to launch a tag-along tender offer to all minority
holders of Usiminas ordinary shares for a price per
share equal to 80% of the price per share paid in
such acquisition, or BRL28.8, and seeks an order to
compel the acquirers to launch an offer at that price
plus interest. If so ordered, the offer would need to
be made to 182,609,851 ordinary shares of Usiminas
not belonging to Usiminas’s control group, and
Confab would have a 17.9% share in the offer.

On September 23, 2013, the first instance court issued
its decision finding in favour of Confab and the other
defendants and dismissing the CSN lawsuit. Such
decision is not final and is subject to appeal. Tenaris
believes that CSN's allegations are groundless and
without merit, as confirmed by several opinions of
Brazilian counsel and previous decisions by Brazil's
securities regulator Comissão de Valores Mobiliários,
including a February 2012 decision determining that
the above mentioned acquisition did not trigger any
tender offer requirement and, more recently, the
first instance court decision on this matter referred
to above. Accordingly, no provision was recorded in
these Consolidated Financial Statements.

Confab delisting
Following a proposal by shareholders representing
32.6% of the shares held by the public in its controlled
Brazilian subsidiary Confab, on March 22, 2012,
Tenaris launched a delisting tender offer to acquire all
of the ordinary and preferred shares held by the public
in Confab for a price in cash of BRL 5.85 per ordinary
or preferred share, subject to adjustments as described

in the offer documents. The shareholders parties to
the proposal had agreed to the offer price and had
committed to tender their shares into the offer.

On April 23, 2012, at the auction for the offer, a total
of 216,269,261 Confab shares were tendered. As a
result, Tenaris attained the requisite threshold to
delist Confab from the São Paulo Stock Exchange.
The final cash price paid in the auction was BRL 5.90
per ordinary or preferred share (or approximately
$3.14 per ordinary or preferred share). Subsequent
to the auction, on April 23, 2012, Tenaris acquired
6,070,270 additional Confab shares in the market at
the same price. Upon settlement of the offer and these
subsequent purchases on April 26, 2012, Tenaris held
in the aggregate approximately 95.9% of Confab.

Tenaris later acquired additional shares representing
approximately 2.3% of Confab at the same price
paid in the auction of the offer and on June 6, 2012,
Confab exercised its right to redeem the remaining
shares at the same price paid to the tendering
shareholders (adjusted by Brazil’s SELIC rate). Confab
became a wholly-owned subsidiary of Tenaris.

Tenaris’s total investment in Confab shares pursuant
to these transactions amounted to approximately
$758.5 million.

Business combinations
In August 2012, Tenaris acquired 100% of the shares
of Filettature attrezzature speciali tubolari S.R.L.
(“Fast”), for a purchase price of $21.4 million. Net
equity acquired amounts to $19.9 million (mainly
cash and cash equivalents for $14.9 million and fixed
assets for $6.3 million).

Had this transaction been consummated on
January 1, 2012, then Tenaris’s unaudited pro
forma net sales and net income from continuing
operations would not have changed materially.

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28. Cash flow disclosures

YEAR ENDED DECEMBER 31

2013

2012

2011

(I) CHANGES IN WORKING CAPITAL

Inventories

Receivables and prepayments

Trade receivables

Other liabilities

Customer advances

Trade payables

(II) INCOME TAX ACCRUALS LESS PAYMENTS

Tax accrued

Taxes paid

(III) INTEREST ACCRUALS LESS PAYMENTS, NET

Interest accrued

Interest received

Interest paid

(IV) CASH AND CASH EQUIVALENTS

Cash at banks, liquidity funds and short - term investments

Bank overdrafts

As of December 31, 2013, 2012 and 2011, the
components of the line item “other, including
currency translation adjustment” are immaterial to
net cash provided by operating activities.

287,874

62,114

129,939

(151,578)

(77,099)

(62,470)

(174,670)

(26,285)

(166,985)

6,202

78,446

(19,720)

(335,337)

122,419

(456,874)

(30,058)

(16,168)

66,378

188,780

(303,012)

(649,640)

627,877

(502,461)

125,416

37,356

42,091

(109,170)

(29,723)

614,529

(16,384)

598,145

541,558

(702,509)

(160,951)

22,048

41,996

(89,349)

(25,305)

828,458

(55,802)

772,656

475,370

(354,466)

120,904

21,567

38,399

(84,846)

(24,880)

823,743

(8,711)

815,032

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29. Related party transactions

As of December 31, 2013:

•

San Faustin S.A., a Luxembourg public limited
liability company (Société Anonyme) (“San
Faustin”), owned 713,605,187 shares in the
Company, representing 60.45% of the Company’s
capital and voting rights.

San Faustin owned all of its shares in the Company
through its wholly-owned subsidiary Techint
Holdings S.à r.l., a Luxembourg private limited
liability company (Société à Responsabilité
Limitée) (“Techint”).

Rocca & Partners Stichting Administratiekantoor
Aandelen San Faustin, a Dutch private foundation
(Stichting) (“RP STAK”) held shares in San Faustin
sufficient in number to control San Faustin.

•

No person or group of persons controls RP STAK.

Based on the information most recently available
to the Company, Tenaris’s directors and senior
management as a group owned 0.12% of the
Company’s outstanding shares.

At December 31, 2013, the closing price of
Ternium’s ADSs as quoted on the New York Stock
Exchange was $31.3 per ADS, giving Tenaris’s
ownership stake a market value of approximately
$719 million. At December 31, 2013, the carrying
value of Tenaris’ ownership stake in Ternium,
based on Ternium’s IFRS financial statements, was
approximately $602.3 million. See Section II.B.2.

Transactions and balances disclosed as with
“Associated” companies are those with companies
over which Tenaris exerts significant influence
or joint control in accordance with IFRS, but
does not have control. All other transactions
and balances with related parties which are not
Associated and which are not consolidated are
disclosed as “Other”.

The following transactions were carried out with
related parties:

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

I. TRANSACTIONS

A. SALES OF GOODS AND SERVICES

Sales of goods to associated parties

Sales of goods to other related parties

Sales of services to associated parties

Sales of services to other related parties

B. PURCHASES OF GOODS AND SERVICES

Purchases of goods to associated parties

Purchases of goods to other related parties

Purchases of services to associated parties

Purchases of services to other related parties

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2013

2012

2011

35,358

115,505

15,439

5,035

43,501

77,828

14,583

4,000

39,476

106,781

14,732

4,740

171,337

139,912

165,729

320,000

14,828

56,820

100,677

492,325

444,742

19,745

112,870

87,510

664,867

170,675

22,134

88,707

113,764

395,280

AT DECEMBER 31

2013

2012

II. PERIOD-END BALANCES

A. ARISING FROM SALES / PURCHASES OF GOODS / SERVICES

Receivables from associated parties

Receivables from other related parties

Payables to associated parties

Payables to other related parties

B. FINANCIAL DEBT

Borrowings from associated parties

Borrowings from other related parties

30,416

30,537

(33,503)

(8,323)

19,127

–

64,125

20,389

(86,379)

(14,123)

(15,988)

(3,909)

(2,212)

(6,121)

Directors’ and senior management compensation
During the years ended December 31, 2013, 2012
and 2011, the cash compensation of Directors and
Senior managers amounted to $27.1 million, $24.1
million and $25.7 million respectively. In addition,

Directors and Senior managers received 534, 542
and 555 thousand units for a total amount of $5.6
million, $5.2 million and $4.9 million respectively
in connection with the Employee retention and long
term incentive program mentioned in Note O (2).

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30. Principal subsidiaries

The following is a list of Tenaris’s principal
subsidiaries and its direct and indirect percentage
of ownership of each controlled company at
December 31, 2013.

Company

Country of
Incorporation

Main activity

Percentage of ownership
at December 31 (*)

Algoma Tubes Inc.

Confab Industrial S.A. and subsidiaries (a)

Canada

Brazil

Manufacturing of seamless steel pipes

Manufacturing of welded steel pipes

Dalmine S.p.A.

Hydril Company and subsidiaries (except detailed) (b)

Inversiones Berna S.A.

Maverick Tube Corporation and subsidiaries

(except detailed)

NKKTubes

PT Seamless Pipe Indonesia Jaya

Prudential Steel ULC

S.C. Silcotub S.A.

Siat S.A.

Italy

USA

Chile

USA

Japan

Indonesia

Canada

Romania

Argentina

and capital goods

Manufacturing of seamless steel pipes

Manufacturing and marketing of

premium connections

Financial Company

Manufacturing of welded steel pipes

Manufacturing of seamless steel pipes

Manufacturing of seamless steel products

Manufacturing of welded steel pipes

Manufacturing of seamless steel pipes

Manufacturing of welded and seamless

steel pipes

2013

2012

2011

100%

99%

100%

51%

77%

100%

99%

100%

51%

77%

100%

41%

99%

100%

51%

77%

100%

82%

Siderca S.A.I.C. and subsidiaries

Argentina

Manufacturing of seamless steel pipes

100%

(except detailed) (c)

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Company

Country of
Incorporation

Main activity

Percentage of ownership
at December 31 (*)

Talta - Trading e Marketing Sociedade Unipessoal Lda.

Madeira

Trading and holding Company

Tenaris Financial Services S.A.

Tenaris Global Services (Canada) Inc.

Uruguay

Canada

Financial Company

Marketing of steel products

Tenaris Global Services (Panama) S.A. - Suc. Colombia

Colombia

Marketing of steel products

Tenaris Global Services (U.S.A.) Corporation

Tenaris Global Services Nigeria Limited

Tenaris Global Services Norway A.S.

Tenaris Global Services S.A. and subsidiaries (d)

USA

Nigeria

Norway

Uruguay

Marketing of steel products

Holding company and marketing of

steel products

Tenaris Global Services (Uk) Ltd

United Kingdom

Marketing of steel products

Tenaris Investments S.ar.l.

Luxembourg

Holding Company

Tenaris Investments S.ar.l., Zug Branch

Switzerland

Financial services

Tenaris Investments Switzerland AG and subsidiaries

Switzerland

Holding Company

(except detailed)

Tubos de Acero de Mexico S.A.

Tubos del Caribe Ltda.

Mexico

Colombia

Manufacturing of seamless steel pipes

Manufacturing of welded steel pipes

2013

2012

2011

100%

(*) All percentages rounded.

(a) For 2011, Tenaris holds 99% of the voting shares of Confab Industrial S.A.

(b) Tenaris holds 100% of Hydril's subsidiaries shares except for Technical Drilling & Production

Services Nigeria. Ltd where it holds 80% for 2013 and 60% for 2012 and 2011.

of Siderca's subsidiaries except for Scrapservice S.A where it holds 75%.

(d) Tenaris holds 97.5% of Tenaris Supply Chain S.A, 95% of Tenaris Saudi Arabia Limited, 60% of
Gepnaris S.A. and 40% of Tubular Technical Services and Pipe Coaters, and 49% of Amaja
Tubular Services Limited.

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31. Nationalization of Venezuelan Subsidiaries

In May 2009, within the framework of Decree
Law 6058, Venezuela’s President announced
the nationalization of, among other companies,
the Company's majority-owned subsidiaries
TAVSA - Tubos de Acero de Venezuela S.A.
(“Tavsa”) and, Matesi Materiales Siderúrgicos
S.A (“Matesi”), and Complejo Siderúrgico
de Guayana, C.A (“Comsigua”), in which
the Company has a non-controlling interest
(collectively, the “Venezuelan Companies”).

In August 2009, Venezuela, acting through the
transition committee appointed by the Minister
of Basic Industries and Mines of Venezuela,
unilaterally assumed exclusive operational
control over Matesi, and in November, 2009,
Venezuela, acting through PDVSA Industrial S.A.
(a subsidiary of Petróleos de Venezuela S.A.),
formally assumed exclusive operational control
over the assets of Tavsa. Venezuela did not pay any
compensation for these assets.

Tenaris’s investments in the Venezuelan companies
are protected under applicable bilateral investment
treaties, including the bilateral investment treaty
between Venezuela and the Belgium-Luxembourg
Economic Union, and Tenaris continues to reserve
all of its rights under contracts, investment treaties
and Venezuelan and international law. Tenaris
has also consented to the jurisdiction of the
International Centre for Settlement of Investment
Disputes (“ICSID”) in connection with the
nationalization process.

In August 2011, Tenaris and its wholly-owned
subsidiary Talta - Trading e Marketing Sociedad
Unipessoal Lda (Talta), initiated arbitration
proceedings against Venezuela before the ICSID
in Washington D.C., pursuant to the bilateral

investment treaties entered into by Venezuela
with the Belgium-Luxembourg Economic Union
and Portugal. In these proceedings, Tenaris and
Talta seek adequate and effective compensation
for the expropriation of their investment in
Matesi. The parties to the arbitration have had
several exchanges of written pleadings. The
final hearing on jurisdiction and the merits was
held from January 31, 2013 to February 7, 2014.
Following the holding of a further hearing for the
examination of certain legal experts provisionally
scheduled for May 2014, and the submission of
post-hearing briefs, the arbitral tribunal will
deliberate and issue a decision.

In July 2012, Tenaris and Talta initiated separate
arbitration proceedings against Venezuela
before the ICSID, seeking adequate and effective
compensation for the expropriation of their
respective investments in Tavsa and Comsigua.
The tribunal in these proceedings was constituted
in July 2013. Tenaris and Talta submitted their
memorial on jurisdiction and the merits in
October 2013. The parties to the arbitration will
exchange one round of jurisdictional submissions
in early 2014 and the tribunal has reserved the right
to hold a jurisdictional hearing after reviewing
the parties’ written submissions. This hearing has
provisionally been scheduled for July 2014.

Based on the facts and circumstances described
above and following the guidance set forth by IAS
27R, the Company ceased consolidating the results
of operations and cash flows of the Venezuelan
Companies as from June 30, 2009, and classified
its investments in the Venezuelan Companies as
financial assets based on the definitions contained
in paragraphs 11(c)(i) and 13 of IAS 32.

The Company classified its interests in the
Venezuelan Companies as available-for-sale

investments since management believes they do not
fulfill the requirements for classification within
any of the remaining categories provided by IAS
39 and such classification is the most appropriate
accounting treatment applicable to non-voluntary
dispositions of assets.

Tenaris or its subsidiaries have net receivables with
the Venezuelan Companies as of December 31, 2013
for a total amount of approximately $25 million.

The Company records its interest in the
Venezuelan Companies at its carrying amount at
June 30, 2009, and not at fair value, following the
guidance set forth by paragraphs 46(c), AG80 and
AG81 of IAS 39.

32. Fees paid to the Company’s principal accountant

Total fees accrued for professional services
rendered by PwC Network firms to Tenaris S.A.
and its subsidiaries are detailed as follows:

All amounts in thousands of U.S. dollars

YEAR ENDED DECEMBER 31

Audit Fees

Audit-Related Fees

Tax Fees

All Other Fees

Total

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2013

2012

2011

5,723

143

117

5,446

335

137

5,398

151

6,034

5,950

5,652

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33. Subsequent events

Annual Dividend Proposal
On February 20, 2014 the Company’s board of
directors proposed, for the approval of the Annual
General Shareholders' meeting to be held on May
7, 2014, the payment of an annual dividend of
$0.43 per share ($0.86 per ADS), or approximately
$507.6 million, which includes the interim
dividend of $0.13 per share ($0.26 per ADS) or
approximately $153.5 million, paid on November
21, 2013. If the annual dividend is approved by the
shareholders, a dividend of $0.30 per share ($0.60
per ADS), or approximately $354.2 million will be
paid on May 22, 2014, with an ex-dividend date
of May 19, 2014. These Consolidated Financial
Statements do not reflect this dividend payable.

Chief Financial Officer
Edgardo Carlos

Tenaris S.A.
Annual accounts

Luxembourg GAAP as at December 31, 2013

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Audit report

To the Shareholders

of Tenaris S.A.

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Report on the annual accounts
We have audited the accompanying annual accounts of Tenaris S.A., which comprise the
balance sheet as at 31 December 2013, the profit and loss account for the year then ended,
and a summary of significant accounting policies and other explanatory information.

Board of Directors’ responsibility for the annual accounts
The Board of Directors is responsible for the preparation and fair presentation of these
annual accounts in accordance with Luxembourg legal and regulatory requirements
relating to the preparation of the annual accounts, and for such internal control as
the Board of Directors determines is necessary to enable the preparation of annual
accounts that are free from material misstatement, whether due to fraud or error.

Responsibility of the “Réviseur d’entreprises agréé”
Our responsibility is to express an opinion on these annual accounts based on our
audit. We conducted our audit in accordance with International Standards on Auditing
as adopted for Luxembourg by the “Commission de Surveillance du Secteur Financier”.
Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance about whether the annual accounts
are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts
and disclosures in the annual accounts. The procedures selected depend on the
judgment of the “Réviseur d’entreprises agréé”, including the assessment of the risks
of material misstatement of the annual accounts, whether due to fraud or error. In
making those risk assessments, the “Réviseur d’entreprises agréé” considers internal
control relevant to the entity’s preparation and fair presentation of the annual accounts
in order to design audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the entity’s internal
control. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by the Board of Directors,
as well as evaluating the overall presentation of the annual accounts.

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We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our audit opinion.

Opinion
In our opinion, these annual accounts give a true and fair view of the financial position
of Tenaris S.A. as of 31 December 2013, and of the results of its operations for the year
then ended in accordance with Luxembourg legal and regulatory requirements relating
to the preparation of the annual accounts.

Report on other legal and regulatory requirements
The management report, including the corporate governance statement, which is the
responsibility of the Board of Directors, is consistent with the annual accounts and includes
the information required by the law with respect to the corporate governance statement.

Luxembourg,
March 28, 2014

PricewaterhouseCoopers, Société coopérative
Represented by

Fabrice Goffin

PricewaterhouseCoopers, Société coopérative, 400 Route d’Esch, B.P. 1443, L-1014 Luxembourg
T: +352 494848 1, F: +352 494848 2900, www.pwc.lu

Cabinet de révision agréé. Expert-comptable (autorisation gouvernementale n°10028256)
R.C.S. Luxembourg B 65 477 - TVA LU25482518

Balance sheet
as at December 31, 2013

Expressed in United States Dollars

ASSETS

C. FIXED ASSETS

III. Financial fixed assets

1. Shares in affiliated undertakings

D. CURRENT ASSETS

II. Debtors

2. Amounts owed by affiliated undertakings

a) becoming due and payable within one year

4. Other receivables

a) becoming due and payable within one year

IV. Cash at bank and cash in hand

Total assets

LIABILITIES

A. CAPITAL AND RESERVES

I. Subscribed capital

II. Share premium

IV. Reserves

1. Legal reserve

V. Profit brought forward

VI. Loss for the financial year

VII. Interim dividend

D. NON-SUBORDINATED DEBTS

6. Amounts owed to affiliated undertakings

a) becoming due and payable within one year

b) becoming due and payable after more than one year

9. Other creditors

a) becoming due and payable within one year

Total liabilities

The accompanying notes are an integral part of these annual accounts.

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Note

2013

2012

23,827,602,627

24,346,876,393

23,827,602,627

24,346,876,393

3,490,592

2,797,315

–

233,271

27,500

504,986

3,723,863

3,329,801

23,831,326,490

24,350,206,194

5,7

5,6

1,180,536,830

609,732,757

118,053,683

22,057,709,325

22,729,060,527

(5,050,231)

(163,720,365)

5,8

(153,469,789)

23,807,512,575

24,320,193,643

6,048,341

15,286,899

12,292,822

16,008,192

2,478,675

1,711,537

23,813,915

30,012,551

23,831,326,490

24,350,206,194

Profit and loss account
for the financial year ended December 31, 2013

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Expressed in United States Dollars

A. CHARGES

5. Other operating charges

6. Value adjustments and fair value adjustments on financial fixed assets

8. Interest and other financial charges

a) concerning affiliated undertakings

b) other interest and charges

10. Income tax

Total charges

B. INCOME

6. Income from financial fixed assets

a) derived from affiliated undertakings

7. Income from financial current assets

a) derived from affiliated undertakings

b) other income

10. Loss for the financial year

Total income

The accompanying notes are an integral part of these annual accounts.

Note

2013

2012

24,162,454

34,413,375

–

157,657,389

863,600

46,360

4,268

757,215

2,221

25,076,682

192,830,233

20,000,000

29,000,000

24,254

2,197

–

109,868

5,050,231

163,720,365

25,076,682

192,830,233

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Notes to audited annual accounts
as at December 31, 2013

1. General information
Tenaris S.A. (the “Company” or “Tenaris”) was
established on December 17, 2001 under the name
of Tenaris Holding S.A. as a public limited liability
company under Luxembourg’s 1929 holding
company regime (societé anonyme holding). On
June 26, 2002, the Company changed its name to
Tenaris S.A. On January 1, 2011, the Company
became an ordinary public limited liability
company (Société Anonyme).

3.2. Foreign currency translation
Current and non-current assets and liabilities
denominated in currencies other than the United
States Dollar (“USD”) are translated into USD at
the rate of exchange at the balance sheet date. The
resulting gains or losses are reflected in the Profit
and loss account for the financial year. Income
and expenses in currencies other than the USD are
translated into USD at the exchange rate prevailing
at the date of each transaction.

Tenaris’s object is to invest mainly in companies
that manufacture and market steel tubes and other
related businesses.

3.3. Financial fixed assets
Shares in affiliated undertakings are stated at
purchase price, adding to the price paid the
expenses incidental thereto.

Tenaris prepares and publishes consolidated
financial statements which include further
information on Tenaris and its subsidiaries.
The financial statements are available at the
registered office of the Company, 29, Avenue de
la Porte-Neuve –L-2227-3rd Floor, Luxembourg.

2. Presentation of the comparative financial data
The comparative figures for the financial year
ended December 31, 2012 relating to items of
balance sheet, profit and loss and the notes to
the accounts are reclassified whenever necessary
to ensure comparability with the figures for the
financial year ended December 31, 2013.

3. Summary of significant accounting policies

Whenever necessary, the Company conducts
impairment tests on its fixed assets in accordance
with Luxembourg regulations.

In case of other than a temporary decline in
respect of the fixed assets value, its carrying value
will be reduced to recognize this decline. If there
is a change in the reasons for which the value
adjustments were made, these adjustments could
be reversed, if appropriate.

3.4. Debtors
Debtors are valued at their nominal value. They
are subject to value adjustments where their
recovery is compromised. These value adjustments
are not continued if the reasons for which the value
adjustments were made have ceased to apply.

3.1. Basis of presentation
These annual accounts have been prepared in
accordance with Luxembourg legal and regulatory
requirements under the historical cost convention.

3.5. Cash at bank and cash in hand
Cash at bank and cash in hand mainly comprise
cash at bank and liquidity funds. Assets recorded
in cash at bank and cash in hand are carried

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at fair market value or at historical cost which
approximates fair market value.

3.6. Non-subordinated debts
Non-subordinated debts are stated at nominal value.

4. Financial fixed assets

Shares in affiliated undertakings
Movements of investments in affiliated undertakings
during the financial year are as follows:

All amounts in United States Dollars,unless otherwise stated

Company

Country

% of
ownership

Book value at
December 31,
2012

Decreases

Book value at
December 31,
2013

Equity at
12.31.2013

Profit for the
financial year
ended on
12.31.2013

Tenaris Investments S.ar.l. (*)

Luxembourg

100.0%

24,346,876,393

(519,273,766)

23,827,602,627

25,693,052,051

930,059,292

Shares in affiliated undertakings

24,346,876,393

(519,273,766)

23,827,602,627

25,693,052,051

930,059,292

(*) Tenaris holds directly or indirectly through its wholly-owned subsidiary Tenaris Investments S.à r.l.
the 100% shares of: Confab Industrial S.A., Hydril Company, Inversiones Berna S.A., Inversiones
Lucerna S.A., Maverick Tube Corporation, Siderca S.A.I.C., Talta - Trading e Marketing, Sociedade
Unipessoal Lda.,Tenaris Investments Limited, Tenaris Investments Switzerland AG, Tenaris
Solutions AG, Texas Pipe Threaders Co, Tubos de Acero de México S.A., Tenaris Bay City, Inc. and
Tenaris Rods (USA), Inc.. Additionally, Tenaris holds through its wholly-owned subsidiary Tenaris
Investments S.à r.l. the 11.5% of Ternium S.A.

On December 7, 2010, Tenaris entered into a
master credit agreement with Tenaris Investments
pursuant to which, upon request from Tenaris,
Tenaris Investments may, but shall not be required
to, from time to time make loans to Tenaris. Any
loan under the master credit agreement may be
repaid or prepaid from time to time through a
reduction of the capital of Tenaris Investments by

an amount equivalent to the amount of the loan
then outstanding (including accrued interest). As
a result of reductions in the capital of Tenaris
Investments made during the financial year
ended December 31, 2013, in connection with
cancellations of loans to Tenaris, the value of the
participation of Tenaris in Tenaris Investments
decreased by USD 519.3 million.

5. Capital and reserves

Expressed in United States Dollars

Item

Subscribed
capital

Share
premium

Legal
reserve

Retained
earnings

Interim
dividend

Capital and
reserves

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Balance at the beginning of the financial year

1,180,536,830

609,732,757

118,053,683

22,565,340,162

(153,469,789)

24,320,193,643

Loss for the period

Dividend paid (1)

Interim dividend (2)

–

(5,050,231)

–

(5,050,231)

(507,630,837)

153,469,789

(354,161,048)

–

(153,469,789)

Balance at the end of the financial year

1,180,536,830

609,732,757

118,053,683

22,052,659,094

(153,469,789)

23,807,512,575

(1) As approved by the ordinary shareholders’ meeting held on May 2, 2013.

(2) As approved by the board of directors’ meeting held on November 6, 2013.

The authorized capital of the Company amounts
to USD 2.5 billion. The total authorized share
capital of the Company is represented by
2,500,000,000 shares with a par value of USD 1 per
share. The total capital issued and fully paid-up at
December 31, 2013 was 1,180,536,830 shares with
a par value of USD 1 per share.

The board of directors is authorized until May
12, 2017, to increase the issued share capital,
through issues of shares within the limits of the
authorized capital.

6. Legal reserve

In accordance with Luxembourg law, the Company
is required to set aside a minimum of 5% of its
annual net profit for each financial year to a legal
reserve. This requirement ceases to be necessary
once the balance on the legal reserve has reached
10% of the issued share capital. The Company’s
reserve has already reached this 10%. If the legal
reserve later falls below the 10% threshold, at least
5% of net profits again must be allocated toward

the reserve. The legal reserve is not available for
distribution to the shareholders.

7. Distributable amounts

Dividends may be paid by Tenaris upon the
ordinary shareholders’ meeting approval to the
extent distributable retained earnings exist.

At December 31, 2013, profit brought forward after
deduction of the loss and the interim dividend for
the financial year of Tenaris under Luxembourg law
totaled approximately USD 21.9 billion.

The share premium amounting to USD 0.6 billion
can also be reimbursed.

8. Interim dividend paid

In November 2013, the Company paid an interim
dividend of USD 153.5 million based on the
board of director’s decision of November 6,
2013 and in compliance with the conditions set

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out in the “Amended law of August 10, 1915 on
commercial companies” regarding the payment of
interim dividends.

9. Taxes

For the financial year ended December 31, 2013 the
Company did not realize any profits subject to tax in
Luxembourg and will therefore be only subject to the
minimum income tax applicable to a Soparfi (société
de participations financières). The Company is also
liable to the minimum Net Wealth Tax.

10. Balances with affiliated undertakings

Expressed in United States Dollars

ASSETS

DEBTORS

becoming due and payable within one year

Tenaris Solutions A.G.

Others

Total

NON-SUBORDINATED DEBTS

becoming due and payable within one year

Siderca Sociedad Anónima Industrial y Comercial

Dalmine S.p.A.

Tempur S.A.

Tubos de Acero de México, S.A.

Maverick Tube Corporation

Tenaris Solutions AG

SIAT Sociedad Anónima

becoming due and payable after more than one year

Tenaris Solutions AG

Siderca Sociedad Anónima Industrial y Comercial

SIAT Sociedad Anónima

Total

Within
a year

After more
than one year

Total at
December 31, 2013

Total at
December 31, 2012

3,490,320

272

3,490,592

1,928,661

1,635,798

378,948

364,914

230,097

86,154

1,423,769

–

3,490,320

2,797,315

272

–

3,490,592

2,797,315

1,928,661

1,635,798

378,948

364,914

230,097

86,154

7,001,107

4,025,240

–

150,686

–

13,781

1,423,769

1,102,008

–

4,700,370

10,586,529

4,700,370

10,586,529

–

3,894,780

10,542,917

1,570,495

6,048,341

15,286,899

21,335,240

28,301,014

11. Other operating charges

Expressed in United States Dollars

Services and fees

Board of director’s accrued fees

Others

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2013

2012

22,072,690

32,436,419

960,000

1,129,764

960,000

1,016,956

24,162,454

34,413,375

12. Income from financial fixed assets derived

from affiliated undertakings

In November 2013, Tenaris S.A. received a dividend
from Tenaris Investments S.à r.l amounting to USD
20.0 million.

13. Parent Company
As of December 31, 2013:

•

San Faustin owned all of its shares in the Company
through its wholly-owned subsidiary Techint Holdings
S.ar.l., a Luxembourg private limited liability company
(Société à Responsabilité Limitée) (“Techint”).

Rocca & Partners Stichting Administratiekantoor
Aandelen San Faustin, a Dutch private foundation
(Stichting) (“RP STAK”) held shares in San Faustin
sufficient in number to control San Faustin.

•

No person or group of persons controls RP STAK.

•

Based on the information most recently available
to the Company, Tenaris’ directors and senior
management as a group owned 0.12% of the
Company’s outstanding shares.

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14. Subsequent event

Annual Dividend Proposal
On February 20, 2014 the Company’s board
of directors proposed, for the approval of the
annual general shareholders' meeting to be
held on May 7, 2014, the payment of an annual
dividend of USD 0.43 per share (USD 0.86 per
ADS) or approximately USD 507.6 million, which
includes the interim dividend of USD 0.13 per
share (USD 0.26 per ADS), or approximately USD
153.5 million, paid on November, 2013. If the
annual dividend is approved by the shareholders,
a dividend of USD 0.30 per share (USD 0.60 per
ADS), or approximately USD 354.2 million will be
paid on May 22, 2014, with an ex-dividend date
of May 19, 2014. These annual accounts do not
reflect this dividend payable.

Chief Financial Officer
Edgardo Carlos

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Investor information

Investor Relations Director
Giovanni Sardagna

General inquiries
investors@tenaris.com

ADS depositary bank
Deutsche Bank
CUSIP No. 88031M019

Internet
www.tenaris.com

Luxembourg Office
29 avenue de la Porte-Neuve
3rd Floor
L-2227 Luxembourg
(352) 26 47 89 78 tel
(352) 26 47 89 79 fax

Phones
USA 1 888 300 5432
Argentina (54) 11 4018 2928
Italy (39) 02 4384 7654
Mexico (52) 55 5282 9929

Stock information
New York Stock Exchange (TS)
Mercato Telematico Azionario (TEN)
Mercado de Valores de Buenos Aires (TS)
Bolsa Mexicana de Valores, S.A. de C.V. (TS)